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Financial News Courtesy Of CNN - Analysis/Commentary By Al Peia (No Affiliation)World Indices Weekly Closing Prices
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve. Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked. According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''. The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP. Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy. "Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke." Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters. The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics. Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc." The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds. Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century." UPDATE - Two former NYSE
traders found guilty of fraud Stock market staggers, but investors still may be too
optimistic Commentary: Newsletters react to
stock markets' losing week Not
good. Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night. He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives." What is Wrong with the Stock Market? Dr. Khaled
Batarfi John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong..... U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006 WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted): July 17 July 14 (respectively) Fed acct 4.087 4.935 Tax/loan note acct
10.502 10.155 Cash balance 14.589
15.192 National debt, subject to limit
8,311.633 8,323.084 The statutory debt limit
is $8.965 trillion. The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued. End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets. That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters? One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers. Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors. What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating. Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open. Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs. The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate. Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder. With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep. Analysts' Forecasts and
Brokerage-Firm Trading
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The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-26-06) Roaring suckers bear market rally is nothing less
than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial average up 64, Standard & Poor's 500 index up 6, and the Nasdaq composite
index up 12, all
very commissionable on heavy volume as in final pre-election result push
for bush, which fell very short, but has provided the same pump-priming of the
market as most recently in 1999 which ended quite badly even without the
exacerbating effects of huge unsustainable and debilitating debt/deficits
deferred/prolonging the inevitable reality even as entire domestic u.s. industries are
rendered defunct and with corporate welfare unwisely spent (war crimes, etc.).
Oil stocks rally on pipeline explosion in Nigeria, spill in Gulf, and sanctions
for Iran, and sharp FALL in oil prices.....riiiiight!.....predictions of
disappointing retail sales even with fire-sale discounted prices..... Highest
increase (2%) in 30 years for the wholesale price index, and as well, the core
ppi (1.3%), GDP growth less than expected at 2%, dollar sharply lower, oil prices up, building permits down, all
unexpectedly bad but great news in the fraudulent alice-in-wonderland
lunatic world of wall street. New Record Quarterly Trade Deficit initially spurred lunatic market rally
along with obfuscating but very commissionable merger activity.
Core inflation a very
unexpected unchanged .....riiiiight!.....spurs superstitious, devoid of
reality, santa rally. Investment
Banks Post Record 2006 Profit .....daaaaah! Churning and earning on
worthless paper, where is that commission dollar coming from even as america
has ceded solvency/leadership in every economic measure. Even at the lofty
record numbers the indices are worth roughly half their value based on
precipitous fall of the dollar in only 5 years with further downside to go.
Superstitious ‘Santa Claus rally’.....riiiiight! High oil price
rally.....riiiiight! Total bulls**t ! Retail sales up a very unexpected
1%, riiiiight, at the same time inventories of such goods rising substantially
(do you think they’re booking sales to ‘straw men/companies’.....I do!) and oil
inventories down. Fake employment numbers (from the government.....riiiiight!)
the impetus for previous b.s. rally despite falling sentiment and uptick in
unemployment. The ism services index (financed by unsustainable deficit/debt spending
and pushing/commissioning worthless paper) and jawboning/bulls**t from the
housing industry (the end is near.....riiiiight!), obfuscating mergers
continued to cloud the picture, closely-watched core-PCE deflator had risen a
more than expected 0.2%, second sub-50 reading on manufacturing activity in as
many sessions-the November ISM index unexpectedly fell to 49.5 (consensus
52.0), Chicago PMI fell to its lowest level (49.9%) in October, and below the
50 level, indicating contraction, crude prices up (OIL
PRICES RISE ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling..., all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Yale Makes Big Changes to MBA Program
AP - For one group of graduate business students at Yale, next month's lessons will take place on pineapple, banana and coffee plantations in Costa Rica.
Goodyear, Strikers Reach Tentative Deal AP
Denver Airport Reopens; Mess Lingers AP
Court Cuts Valdez Judgment Against Exxon AP
Macy's Pulls Sean John Hooded Jackets APWith only four trading days left in 2006, today officially marked the start of the classic year-end Santa Claus rally, according to the Stock Trader's Almanac. As has been the case with stocks showing weakness on the last trading day before Christmas over the last four years, however, today was no exception.Be that as it may, with the belief stocks are overbought on a short-term basis resurfacing to consolidate some of the market's five-month rally, thin volumes heading into the long holiday weekend offered very little in the way of conviction on the part of sellers. The NYSE did not even see 1.0 bln shares trade hands. Before the bell, the Commerce Dept. showed that personal spending in November rose the most since July. With the Fed recently saying that some inflation risks remain, leaving their focus on "incoming" data to dictate monetary policy decisions, the accompanying core-PCE deflator (and Fed's favored inflation gauge) checking in flat (0.0%) also helped to support the possibility of a "soft landing." After all, today's report follows 0.2% gains over the prior two months, lends some credence to last Friday's similar 0.0% reading on core-CPI and increases the likelihood of a Fed easing in early 2007 since it is evident that inflation pressures are definitely moderating.Nonetheless, with such moderation coming at the expense of slower economic growth, a stock market more concerned about the strength of the economy than inflation for the time being, a mixed durable orders report provided an ideal excuse to take some more money off the table. As a reminder, the Dow has hit new record highs more than 20 times since October while the S&P 500 and Nasdaq have posted respective gains of 15% and 19% since bottoming out in July.Durable orders rose a larger than expected 1.9% in November (consensus 1.5%); but non-defense capital goods excluding transportation orders, which are sometimes considered a barometer of underlying business investment trends, fell 1.4%. Not surprisingly, the Industrials sector was one of today's worst performers.Of the other nine sectors closing lower, Technology paced the way to the downside, and the absence of such influential leadership acted as the largest obstacle for the bulls to overcome Friday. Qualcomm (QCOM 37.81 -0.73) was one of the sector's biggest disappointments, plunging nearly 2.0% after cutting its Q1 profit forecasts.One bright spot that played into our Overweight rating on Tech, though, was Micron Technology (MU 13.94 +0.45). The stock surged 3.3% after first quarter profits tripled, but was unable to offer much support for the rest of the semiconductor space. Red Hat (RHT 22.46 +4.50) also soared (+25%) after beating Wall Street forecasts and issuing upside Q4 guidance; but since its Linux platform rivals Windows, Dow component Microsoft (MSFT 29.64 -0.34) tumbled 1.1% at the expense of Red Hat's victory lap.Energy was another constraint on the broader market as a pullback in oil prices prompted another round of consolidation in one of this year's best performers. Thus, the absence of leadership from the biggest contributor to earnings growth on the S&P 500 over the last several quarters overshadowed the diminished inflationary potential of lower energy prices and simply acted as another headwind for buyers.A report at 10:00 ET showing sentiment strengthened slightly over the last couple of weeks offered some solace when it was released. But the study compiled by the University of Michigan checking in stronger than expected merely provided bond traders with more fodder to lock in recent gains as well. As a result, a sell-off in Treasuries lifting bond yields across the curve weighed heavily on the rate-sensitive Financials sector, leaving the bulls waiting until after the holidays to try to finish the rally they started five months ago. The 10-year note tumbled 19 ticks, lifting the yield to 4.62% and sparking valuation concerns in stocks across the board. BTK +0.4% DJ30 -78.03 DJTA -0.7% DJUA -0.2% DOT -0.7% NASDAQ -14.67 NQ100 -1.0% R2K -0.3% SOX -0.6% SP400 -0.4% SP500 -7.54 XOI -1.2% NASDAQ Dec/Adv/Vol 1709/1312/1.32 bln NYSE Dec/Adv/Vol 1966/1240/942 mln
The current-account trade deficit increased 3.9 percent to an all-time high of $225.6 billion in the July-September quarter, the Commerce Department reported Monday. That third-quarter deficit was equal to 6.8 percent of the total economy, up from 6.6 percent of gross domestic product in the second quarter. The current account is the broadest measure of trade because it tracks not only the flow of goods and services across borders but also investment flows. It represents the amount of money that must be borrowed from foreigners to make up the difference between imports and exports. At current levels, the United States is borrowing more than $2 billion a day from foreigners to finance the trade deficit.
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $61; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-22-06) Stocks drop still only modestly relative to reality
with suckers bear market rally still intact as the wall street fraud continues
to suck the suckers in; ie., as the Dow Jones industrial average fell 78.03, S&P fell
7.54 ,and NASDAQ fell 14.67 , all very commissionable on heavy volume,
as in final pre-election result push for bush, which fell very short. Highest
increase (2%) in 30 years for the wholesale price index, and as well, the core
ppi (1.3%), GDP growth less than expected at 2%, dollar sharply lower, oil prices up, building permits down, all
unexpectedly bad but great news in the fraudulent alice-in-wonderland
lunatic world of wall street. New Record Quarterly Trade Deficit initially spurred lunatic market rally
along with obfuscating but very commissionable merger activity.
Core inflation a very
unexpected unchanged .....riiiiight!.....spurs superstitious, devoid of
reality, santa rally. Investment
Banks Post Record 2006 Profit .....daaaaah! Churning and earning on
worthless paper, where is that commission dollar coming from even as america
has ceded solvency/leadership in every economic measure. Even at the lofty
record numbers the indices are worth roughly half their value based on
precipitous fall of the dollar in only 5 years with further downside to go.
Superstitious ‘Santa Claus rally’.....riiiiight! High oil price
rally.....riiiiight! Total bulls**t ! Retail sales up a very unexpected
1%, riiiiight, at the same time inventories of such goods rising substantially
(do you think they’re booking sales to ‘straw men/companies’.....I do!) and oil
inventories down. Fake employment numbers (from the government.....riiiiight!)
the impetus for previous b.s. rally despite falling sentiment and uptick in
unemployment. The ism services index (financed by unsustainable deficit/debt spending
and pushing/commissioning worthless paper) and jawboning/bulls**t from the
housing industry (the end is near.....riiiiight!), obfuscating mergers
continued to cloud the picture, closely-watched core-PCE deflator had risen a
more than expected 0.2%, second sub-50 reading on manufacturing activity in as
many sessions-the November ISM index unexpectedly fell to 49.5 (consensus
52.0), Chicago PMI fell to its lowest level (49.9%) in October, and below the
50 level, indicating contraction, crude prices up (OIL
PRICES RISE ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling..., all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Yale Makes Big Changes to MBA Program
AP - For one group of graduate business students at Yale, next month's lessons will take place on pineapple, banana and coffee plantations in Costa Rica.
Goodyear, Strikers Reach Tentative Deal AP
Denver Airport Reopens; Mess Lingers AP
Court Cuts Valdez Judgment Against Exxon AP
Macy's Pulls Sean John Hooded Jackets APWith only four trading days left in 2006, today officially marked the start of the classic year-end Santa Claus rally, according to the Stock Trader's Almanac. As has been the case with stocks showing weakness on the last trading day before Christmas over the last four years, however, today was no exception.Be that as it may, with the belief stocks are overbought on a short-term basis resurfacing to consolidate some of the market's five-month rally, thin volumes heading into the long holiday weekend offered very little in the way of conviction on the part of sellers. The NYSE did not even see 1.0 bln shares trade hands. Before the bell, the Commerce Dept. showed that personal spending in November rose the most since July. With the Fed recently saying that some inflation risks remain, leaving their focus on "incoming" data to dictate monetary policy decisions, the accompanying core-PCE deflator (and Fed's favored inflation gauge) checking in flat (0.0%) also helped to support the possibility of a "soft landing." After all, today's report follows 0.2% gains over the prior two months, lends some credence to last Friday's similar 0.0% reading on core-CPI and increases the likelihood of a Fed easing in early 2007 since it is evident that inflation pressures are definitely moderating.Nonetheless, with such moderation coming at the expense of slower economic growth, a stock market more concerned about the strength of the economy than inflation for the time being, a mixed durable orders report provided an ideal excuse to take some more money off the table. As a reminder, the Dow has hit new record highs more than 20 times since October while the S&P 500 and Nasdaq have posted respective gains of 15% and 19% since bottoming out in July.Durable orders rose a larger than expected 1.9% in November (consensus 1.5%); but non-defense capital goods excluding transportation orders, which are sometimes considered a barometer of underlying business investment trends, fell 1.4%. Not surprisingly, the Industrials sector was one of today's worst performers.Of the other nine sectors closing lower, Technology paced the way to the downside, and the absence of such influential leadership acted as the largest obstacle for the bulls to overcome Friday. Qualcomm (QCOM 37.81 -0.73) was one of the sector's biggest disappointments, plunging nearly 2.0% after cutting its Q1 profit forecasts.One bright spot that played into our Overweight rating on Tech, though, was Micron Technology (MU 13.94 +0.45). The stock surged 3.3% after first quarter profits tripled, but was unable to offer much support for the rest of the semiconductor space. Red Hat (RHT 22.46 +4.50) also soared (+25%) after beating Wall Street forecasts and issuing upside Q4 guidance; but since its Linux platform rivals Windows, Dow component Microsoft (MSFT 29.64 -0.34) tumbled 1.1% at the expense of Red Hat's victory lap.Energy was another constraint on the broader market as a pullback in oil prices prompted another round of consolidation in one of this year's best performers. Thus, the absence of leadership from the biggest contributor to earnings growth on the S&P 500 over the last several quarters overshadowed the diminished inflationary potential of lower energy prices and simply acted as another headwind for buyers.A report at 10:00 ET showing sentiment strengthened slightly over the last couple of weeks offered some solace when it was released. But the study compiled by the University of Michigan checking in stronger than expected merely provided bond traders with more fodder to lock in recent gains as well. As a result, a sell-off in Treasuries lifting bond yields across the curve weighed heavily on the rate-sensitive Financials sector, leaving the bulls waiting until after the holidays to try to finish the rally they started five months ago. The 10-year note tumbled 19 ticks, lifting the yield to 4.62% and sparking valuation concerns in stocks across the board. BTK +0.4% DJ30 -78.03 DJTA -0.7% DJUA -0.2% DOT -0.7% NASDAQ -14.67 NQ100 -1.0% R2K -0.3% SOX -0.6% SP400 -0.4% SP500 -7.54 XOI -1.2% NASDAQ Dec/Adv/Vol 1709/1312/1.32 bln NYSE Dec/Adv/Vol 1966/1240/942 mln
The current-account trade deficit increased 3.9 percent to an all-time high of $225.6 billion in the July-September quarter, the Commerce Department reported Monday. That third-quarter deficit was equal to 6.8 percent of the total economy, up from 6.6 percent of gross domestic product in the second quarter. The current account is the broadest measure of trade because it tracks not only the flow of goods and services across borders but also investment flows. It represents the amount of money that must be borrowed from foreigners to make up the difference between imports and exports. At current levels, the United States is borrowing more than $2 billion a day from foreigners to finance the trade deficit.
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $63; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
12-21-06) Stocks drop still only modestly relative to reality
with suckers bear market rally still intact as the wall street fraud continues
to suck the suckers in; ie., as the Dow Jones industrial average fell 42.62, S&P fell
5.22 ,and NASDAQ fell 11.76 , all very commissionable on heavy volume,
as in final pre-election result push for bush, which fell very short. Highest
increase (2%) in 30 years for the wholesale price index, and as well, the core
ppi (1.3%), GDP growth less than expected at 2%, dollar sharply lower, oil prices up, building permits down, all
unexpectedly bad but great news in the fraudulent alice-in-wonderland
lunatic world of wall street. New Record Quarterly Trade Deficit initially spurred lunatic market rally
along with obfuscating but very commissionable merger activity.
Core inflation a very
unexpected unchanged .....riiiiight!.....spurs superstitious, devoid of
reality, santa rally. Investment
Banks Post Record 2006 Profit .....daaaaah! Churning and earning on
worthless paper, where is that commission dollar coming from even as america
has ceded solvency/leadership in every economic measure. Even at the lofty
record numbers the indices are worth roughly half their value based on
precipitous fall of the dollar in only 5 years with further downside to go.
Superstitious ‘Santa Claus rally’.....riiiiight! High oil price
rally.....riiiiight! Total bulls**t ! Retail sales up a very unexpected
1%, riiiiight, at the same time inventories of such goods rising substantially
(do you think they’re booking sales to ‘straw men/companies’.....I do!) and oil
inventories down. Fake employment numbers (from the government.....riiiiight!)
the impetus for previous b.s. rally despite falling sentiment and uptick in
unemployment. The ism services index (financed by unsustainable deficit/debt spending
and pushing/commissioning worthless paper) and jawboning/bulls**t from the
housing industry (the end is near.....riiiiight!), obfuscating mergers
continued to cloud the picture, closely-watched core-PCE deflator had risen a
more than expected 0.2%, second sub-50 reading on manufacturing activity in as
many sessions-the November ISM index unexpectedly fell to 49.5 (consensus
52.0), Chicago PMI fell to its lowest level (49.9%) in October, and below the
50 level, indicating contraction, crude prices up (OIL
PRICES RISE ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling..., all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Red Hat 3Q Profit Drops but Beats Views
AP - Stock-compensation expenses cut into profits for the second consecutive quarter for Red Hat Inc., but the company again exceeded analysts' expectations.
Caremark Shareholders Fight CVS Deal AP
Toyota Announces 2007 Production Target AP
Pfizer's McKinnell to Get $180M Package AP
Dow Ends Down 43 on Manufacturing News APNot surprisingly following the market's run-up of late, renewed concerns of weakness in areas that were thought to be stabilizing exacerbated worries about the pace of economic growth, prompting investors to take some more money off the table. Out of the gate, stocks were showing their resilience to more evidence of a slowing U.S. economy. Before the bell, the Commerce Dept. showed at 8:30 ET that the U.S. economy grew at a slower pace (2.0%) than previously estimated (2.2%), marking the weakest quarter since Q4 of last year when the economy expanded at a 1.8% annual rate. Fortunately for the bulls, the dated nature of the report and the forward-thinking of the market have so far left investors more interested in the current pace of economic growth and a focus on forecasts for 2007. However, with the Dow, S&P 500 and Nasdaq running virtually uncontested over the last five months, posting respective gains of 6.7%, 6.5%, and 7.5% in Q4 so far, investors were already exhibiting a cautious tone midday ahead of a potentially market-moving piece of economic data. Then, as traders worked their way through the New York lunch hour, the Philadelphia Federal Reserve reported the biggest drop (-4.3%) in manufacturing activity in more than three years. That was the third negative reading in four months. Since the report joins the industrial heavy Chicago PMI and the national ISM index at contractionary sub-50 levels in November, economically-sensitive stocks like Alcoa (AA 29.26 -0.78) got hit hard. As today's worst performing Dow component, Alcoa's 2.6% decline contributed to the Materials sector pacing the way lower among the eight sectors losing ground. Richmond Fed President Lacker saying that housing weakness will continue to be a drag on economic growth in first half of 2007, which runs counter to a growing belief that housing sales seem to be bottoming, also weighed on sentiment. A more influential area of weakness, though, was Technology. PMC-Sierra (PMCS 6.60 -0.29) cutting its Q4 sales targets renewed concerns about growth prospects within the influential semiconductor space. Jabil Circuit (JBL 24.18 -2.38) plunging 9% after also issuing downside revenue guidance last night added insult to injury to the tech sector, leaving Electronic Manufacturing Services (-4.2%) as the day's worst performing S&P industry group. On a positive note, oil prices plunged 1.7% and closed near session lows, which bodes well for consumers especially in the midst of the holiday-shopping season. However, subsequent consolidation throughout the profit engine that is the Energy sector raised concerns about its earnings potential heading into the New Year. Crude for February delivery finished at $62.66/bbl amid speculation mild weather forecasts will diminish demand for heating oil. Telecom was among the only bright spots, as the pending AT&T (T 35.22 +0.27) and BellSouth (BLS 46.28 +0.73) merger came closer to winning approval; but as one of the least influential among the 10 S&P 500 sectors, its 0.6% advance had little impact on the broader market. Consumer Staples was the only other sector to finish in the green, getting a lift following better than expected earnings. Upside surprises came from the likes of ConAgra (CAG 27.38 +0.53) and General Mills (GIS 59.07 +1.08), both of which closed at new 52-week highs. DJ30 -42.62 NASDAQ -11.76 SP500 -5.22 NASDAQ Dec/Adv/Vol 1700/1346/1.75 bln NYSE Dec/Adv/Vol 1967/1336/1.28 bln
The current-account trade deficit increased 3.9 percent to an all-time high of $225.6 billion in the July-September quarter, the Commerce Department reported Monday. That third-quarter deficit was equal to 6.8 percent of the total economy, up from 6.6 percent of gross domestic product in the second quarter. The current account is the broadest measure of trade because it tracks not only the flow of goods and services across borders but also investment flows. It represents the amount of money that must be borrowed from foreigners to make up the difference between imports and exports. At current levels, the United States is borrowing more than $2 billion a day from foreigners to finance the trade deficit.
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $63; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
12-20-06) Stocks drop still only modestly relative to reality
with suckers bear market rally still intact as the wall street fraud continues
to suck the suckers in; ie., as the Dow Jones industrial average fell 7.45, S&P fell
2.02 ,and NASDAQ fell 1.94 , all very commissionable on heavy volume, as
in final pre-election result push for bush, which fell very short. Highest
increase (2%) in 30 years for the wholesale price index, and as well, the core
ppi (1.3%), dollar sharply lower, oil prices up, building permits down, all
unexpectedly bad but great news in the fraudulent alice-in-wonderland
lunatic world of wall street. New Record Quarterly Trade Deficit initially spurred lunatic market rally
along with obfuscating but very commissionable merger activity.
Core inflation a very
unexpected unchanged .....riiiiight!.....spurs superstitious, devoid of
reality, santa rally. Investment
Banks Post Record 2006 Profit .....daaaaah! Churning and earning on
worthless paper, where is that commission dollar coming from even as america
has ceded solvency/leadership in every economic measure. Even at the lofty
record numbers the indices are worth roughly half their value based on
precipitous fall of the dollar in only 5 years with further downside to go.
Superstitious ‘Santa Claus rally’.....riiiiight! High oil price
rally.....riiiiight! Total bulls**t ! Retail sales up a very unexpected
1%, riiiiight, at the same time inventories of such goods rising substantially
(do you think they’re booking sales to ‘straw men/companies’.....I do!) and oil
inventories down. Fake employment numbers (from the government.....riiiiight!)
the impetus for previous b.s. rally despite falling sentiment and uptick in
unemployment. The ism services index (financed by unsustainable deficit/debt spending
and pushing/commissioning worthless paper) and jawboning/bulls**t from the
housing industry (the end is near.....riiiiight!), obfuscating mergers
continued to cloud the picture, closely-watched core-PCE deflator had risen a
more than expected 0.2%, second sub-50 reading on manufacturing activity in as
many sessions-the November ISM index unexpectedly fell to 49.5 (consensus
52.0), Chicago PMI fell to its lowest level (49.9%) in October, and below the
50 level, indicating contraction, crude prices up (OIL
PRICES RISE ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling..., all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Nike 2nd-Quarter Profit Climbs 8 Percent
AP - A tax break from the Dutch, surging demand in China and the enduring popularity of another shoe brand now owned by Nike Inc. all helped the world's largest athletic shoe and clothing company boost profit in its second quarter.Delta Creditors Weighing Options AP
FedEx 3Q Outlook Overshadows 2Q Earnings AP
Dow Down 7 on Lackluster FedEx Forecast AP
Goldman CEO's $53.4M Bonus Breaks Record APStocks stumbled out of the gate and closed in similar fashion as investors found little in the way of specific market-moving news items to maintain even the smallest of market gains. With the Dow closing at another new record high yesterday and hitting an all-time intraday high today, investors exhibited a sense of caution in the face of higher oil prices and mixed earnings news.Although not a Dow component, a barometer of the economy that is FedEx (FDX 111.85 -2.15) issuing a Q3 profit outlook below Wall Street's forecasts brought the growth prospects of some fellow blue-chip names into question. The stock opened down 3.4% and took a toll on transportation stocks, especially rival UPS (UPS 74.77 -0.98), that were already under pressure as oil prices approached $64/bbl. Crude for February delivery closed at $63.72/bbl following a much larger than expected drawdown in weekly crude supplies.The inability of Energy stocks to take notice and extend yesterday's recovery efforts removed some notable leadership in one of the largest contributors to earnings growth on the S&P 500. Energy paced the way lower among the day's seven losing sectors (-1.2%) as a 4.4% sell-off in natural gas futures (inventories are at record levels) sparked another round of profit taking.On a positive note, Ericsson (ERIC 40.58 -0.04) announcing plans to acquire Redback Networks (RBAK 25.66 +4.49) for $2.1 bln, an 18% premium to Tuesday's close, temporarily put to rest valuation concerns and the sustainability of such a strong second half performance for tech. Hewlett-Packard (HPQ 41.34 +0.91) surging 2.3% to a multi-year high, after Banc of America Securities affirmed its Buy rating on HPQ as a top pick, also provided notable sector support. That is, until fellow Dow component Intel (INTC 20.60 -0.06) relinquished all of its 1.4% intraday advance and Internet stocks (e.g. GOOG -1.2%, YHOO -3.1%) sold off into the close. DJ30 -7.45 DJTA -1.1% DJUA -0.5% DOT -0.3% NASDAQ -1.94 NQ100 -0.4% R2K +0.5% SOX +0.7% SP400 +0.1% SP500 -2.02 XOI -1.1% NASDAQ Dec/Adv/Vol 1353/1709/1.77 bln NYSE Dec/Adv/Vol 1425/1858/1.32 bln
The current-account trade deficit increased 3.9 percent to an all-time high of $225.6 billion in the July-September quarter, the Commerce Department reported Monday. That third-quarter deficit was equal to 6.8 percent of the total economy, up from 6.6 percent of gross domestic product in the second quarter. The current account is the broadest measure of trade because it tracks not only the flow of goods and services across borders but also investment flows. It represents the amount of money that must be borrowed from foreigners to make up the difference between imports and exports. At current levels, the United States is borrowing more than $2 billion a day from foreigners to finance the trade deficit.
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $63; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-19-06) Stocks drop still only modestly relative to reality
with suckers bear market rally into the close to end mixed as the wall street
fraud continues to suck the suckers in; ie., as the Dow Jones industrial
average up 30, S&P up 3,and NASDAQ fell 6,
all very commissionable on heavy volume, as in final pre-election result push for bush, which fell very short. Highest
increase (2%) in 30 years for the wholesale price index, and as well, the core
ppi (1.3%), dollar sharply lower, oil prices up, building permits down, all
unexpectedly bad but great news in the fraudulent alice-in-wonderland
lunatic world of wall street. New Record Quarterly Trade Deficit initially spurred lunatic market rally
along with obfuscating but very commissionable merger activity.
Core inflation a very
unexpected unchanged .....riiiiight!.....spurs superstitious, devoid of
reality, santa rally. Investment
Banks Post Record 2006 Profit .....daaaaah! Churning and earning on
worthless paper, where is that commission dollar coming from even as america
has ceded solvency/leadership in every economic measure. Even at the lofty
record numbers the indices are worth roughly half their value based on
precipitous fall of the dollar in only 5 years with further downside to go.
Superstitious ‘Santa Claus rally’.....riiiiight! High oil price
rally.....riiiiight! Total bulls**t ! Retail sales up a very unexpected
1%, riiiiight, at the same time inventories of such goods rising substantially
(do you think they’re booking sales to ‘straw men/companies’.....I do!) and oil
inventories down. Fake employment numbers (from the government.....riiiiight!)
the impetus for previous b.s. rally despite falling sentiment and uptick in
unemployment. The ism services index (financed by unsustainable deficit/debt spending
and pushing/commissioning worthless paper) and jawboning/bulls**t from the
housing industry (the end is near.....riiiiight!), obfuscating mergers
continued to cloud the picture, closely-watched core-PCE deflator had risen a
more than expected 0.2%, second sub-50 reading on manufacturing activity in as
many sessions-the November ISM index unexpectedly fell to 49.5 (consensus
52.0), Chicago PMI fell to its lowest level (49.9%) in October, and below the
50 level, indicating contraction, crude prices up (OIL
PRICES RISE ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling..., all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Harrah's Development Plans Questioned
Oracle 2Q Earnings Climb 21 Percent
AP - Harrah's Entertainment Inc. chief executive Gary Loveman said a $17.1 billion deal to take the world's largest casino company private was "a change in ownership, not a change in direction," but analysts predicted project development could be slowed.Former AA Chief Don Carty Named Dell CFO AP
Palm Second-Quarter Profit Falls AP
Dow Hits Record High on Blue Chip Gains AP
Morgan Stanley to Spin Off Discover APThe major averages finished in split fashion Tuesday as investors weighed renewed momentum in the Energy sector against a rebound in oil prices, a large jump in inflation at the wholesale level and mixed news on the corporate front.Yesterday, oil prices plunged 1.9%, recording their biggest drop in a month and prompting a widespread sell-off in the Energy sector (-2.7%). That removed some notable leadership from one of the S&P 500's biggest contributors to earnings growth and contributed to the blue-chip indices' inability to build on a three-day winning streak.Today, oil prices rebounded to the tune of 1.5%, which on a typical day reminds investors of its potential to sustain inflation pressures and curb consumer spending. In fact, such concerns were evident in early trading after a 6.1% surge in energy prices last month contributed to November total PPI checking in with a surprising 2.0% increase, the biggest rise since 1974.The more closely-watched core-PPI also rose by a much higher than expected rate, climbing 1.3% (consensus 0.2%), the most since July 1980, and served as a reminder that some inflation risks remain.Be that as it may, today's rebound in black gold ignited bargain-hunting interest in everything from Explorers and Drillers to Integrated Oil and Refiners -- four of today's best performing industry groups. Thirty of 31 components in the S&P 500 Energy Index closed higher, led by a 2.1% jump in Exxon Mobil (XOM 77.06 +1.55) which was the biggest reason behind the Dow closing at a record high.Crude for January delivery, which expired today at $63.15/bbl (+$0.94), surged amid speculation tomorrow's EIA report will show a fourth straight drawdown in weekly inventories.Also helping to offset the disappointing PPI report, which upon further analysis was viewed more as a temporary spike that doesn't undermine the recent favorable trends in consumer inflation, was some encouraging Fedspeak.With investors preoccupied with the pace of economic growth, Dallas Fed President Fisher saying in a prepared speech this afternoon that he's optimistic that the economy will grow faster than "the gloomy forecasts making all the headlines lately" helped improve sentiment. The highly regarded inflation hawk also said he believes the Fed's objective of piloting the U.S. economy at a "comfortable cruising altitude and speed while preventing the engine from overheating with inflation," his interpretation of what the pundits call a "soft landing," is within reach.With concerns about the strength of the U.S. economy taking a back seat to inflation fears for the time being, economically-sensitive areas like Industrials and Discretionary eventually turned the corner to provide notable sources of market support. The latter was under pressure throughout the day after Circuit City (CC 18.99 -3.77) posted an unexpected quarterly loss and cut its fiscal year EPS outlook. That sent the stock down nearly 17% and earmarked Computer & Electronics Retail (-3.7%) as today's worst performing S&P industry group.Homebuilders were also a weak spot after Hovnanian Enterprises (HOV 34.62 -0.63) posted a larger than expected quarterly loss and following mixed housing data. Before the bell, Housing starts rose 6.7% in November to 1.59 mln, suggesting the housing market may be bottoming, but building permits fell 3% to a nine-year low. Since there are no notable Energy names listed on the Nasdaq, a tech-heavy index believed to be overbought on a short-term basis was unable to benefit from the rally in oil stocks and completely stall what was shaping up to be an even larger day of consolidation on the Composite. Oracle Corp (ORCL 17.10 -0.81) was the biggest drag on tech after posting the slowest sales growth for applications in four quarters. As a reminder, nearly 8% of the 10% year-to-date gain on the Nasdaq has been amassed in the fourth quarter. DJ30 +30.05 NASDAQ -6.02 SP500 1425.55 NASDAQ Dec/Adv/Vol 1698/1360/1.99 bln NYSE Dec/Adv/Vol 1524/1769/1.50 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $63; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-18-06) Stocks drop still only modestly relative to reality
with suckers bear market rally still intact as the wall
street fraud continues to suck the suckers in; ie., as the Dow Jones industrial
average fell 4.25, S&P fell 4.61 ,and
NASDAQ fell 21.63, all very commissionable
on heavy volume, as in final pre-election result push for bush, which fell very
short. New Record Quarterly Trade Deficit initially spurs lunatic market rally
along with obfuscating but very commissionable merger activity.
Core inflation a very
unexpected unchanged .....riiiiight!.....spurs superstitious, devoid of
reality, santa rally. Investment
Banks Post Record 2006 Profit .....daaaaah! Churning and earning on
worthless paper, where is that commission dollar coming from even as america
has ceded solvency/leadership in every economic measure. Even at the lofty
record numbers the indices are worth roughly half their value based on
precipitous fall of the dollar in only 5 years with further downside to go.
Superstitious ‘Santa Claus rally’.....riiiiight! High oil price
rally.....riiiiight! Total bulls**t ! Retail sales up a very unexpected
1%, riiiiight, at the same time inventories of such goods rising substantially
(do you think they’re booking sales to ‘straw men/companies’.....I do!) and oil
inventories down. Fake employment numbers (from the government.....riiiiight!)
the impetus for previous b.s. rally despite falling sentiment and uptick in
unemployment. The ism services index (financed by unsustainable deficit/debt spending
and pushing/commissioning worthless paper) and jawboning/bulls**t from the
housing industry (the end is near.....riiiiight!), obfuscating mergers
continued to cloud the picture, closely-watched core-PCE deflator had risen a
more than expected 0.2%, second sub-50 reading on manufacturing activity in as
many sessions-the November ISM index unexpectedly fell to 49.5 (consensus
52.0), Chicago PMI fell to its lowest level (49.9%) in October, and below the
50 level, indicating contraction, crude prices up (OIL
PRICES RISE ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling..., all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
NYSE-Euronext
Wins Crucial Support AP
T.M.X.
Elmo Was Developed in Secrecy AP
EBay
to Open Chinese Web Site in Shift AP
Dow
Ends Down 4 After Barrage of Buyouts AP
A day of deal-making on Wall Street got
stocks off to a good start, but an underlying sense that the market is
overbought on a short-term basis created a wall of resistance for the major
indices.The Nasdaq was the hardest hit among the major averages, as a wave of
profit taking in large-cap issues in the afternoon session sparked a
noticeable pullback that ultimately dragged down the broader market.A weak
energy sector (-2.68%) was also to blame as it took a dive in conjunction
with crude prices (-$1.28 to $62.81) and brokerage downgrades of sector
heavyweights ExxonMobil (XOM 75.51, -1.79) and Schlumberger
(SLB 65.07, -2.48).The outperformance of the financial sector (+0.46%), which
was bolstered by a Merrill Lynch upgrade of Citigroup (C
55.44, +1.37) to Buy from Neutral and gains in the investment banks that
followed a spate of M&A activity, proved instrumental in keeping the
broader market's losses in check. General Electric (GE
38.00, +0.64) hitting a new-52-week high also helped in that respect.The
M&A highlights today included a $26 billion offer from Express
Scripts (ESRX 69.97, +1.31) to acquire Caremark (CMX
55.58, +5.28), a $10.9 billion private equity bid to purchase Biomet
(BMET 41.59, -0.41), and a near $9.0 billion offer from Apollo Management to
buy Realogy (H). It was also reported that Harrah's
Entertainment (HET 82.18, +2.68) is ready to strike a deal with a
private equity group for approximately $17 billion or $90 per share.As an
aside, Caremark previously signed a definitive merger agreement with CVS
Corp. (CVS 30.01, -0.51), so the Express Scripts bid promises to make
things interesting for those companies, and their shareholders, in the coming
weeks.Looking to Tuesday, the trading action is expected to be shaped by the
fiscal second earnings report from Oracle (ORCL 17.91, +0.23)
and the Housing Starts and PPI data that will be released at 08:30 ET.DJ30
-4.25 NASDAQ -21.63 NQ100 -0.97% SP500 -4.61 NASDAQ Dec/Adv/Vol 2170/898/1.80
bln NYSE Dec/Adv/Vol 2932/1283/1.36 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $63; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-15-06) Suckers bear market rally is nothing less than a defacto fraud by
the lunatic frauds on wall street to suck the suckers in; ie.,
as the Dow Jones industrial average up 28.76,
Standard & Poor's 500 index up 1.60, and the Nasdaq composite index up 3.35, all very
commissionable on heavy volume as in final pre-election result push for bush, which
fell very short. Core inflation a very
unexpected unchanged .....riiiiight!.....spurs superstitious, devoid of
reality, santa rally. Investment
Banks Post Record 2006 Profit .....daaaaah! Churning and earning on
worthless paper, where is that commission dollar coming from even as america
has ceded solvency/leadership in every economic measure. Even at the lofty
record numbers the indices are worth roughly half their value based on
precipitous fall of the dollar in only 5 years with further downside to go.
Superstitious ‘Santa Claus rally’.....riiiiight! High oil price
rally.....riiiiight! Total bulls**t ! Retail sales up a very unexpected
1%, riiiiight, at the same time inventories of such goods rising substantially
(do you think they’re booking sales to ‘straw men/companies’.....I do!) and oil
inventories down. Fake employment numbers (from the government.....riiiiight!)
the impetus for previous b.s. rally despite falling sentiment and uptick in
unemployment. The ism services index (financed by unsustainable deficit/debt spending
and pushing/commissioning worthless paper) and jawboning/bulls**t from the
housing industry (the end is near.....riiiiight!), obfuscating mergers
continued to cloud the picture, closely-watched core-PCE deflator had risen a
more than expected 0.2%, second sub-50 reading on manufacturing activity in as
many sessions-the November ISM index unexpectedly fell to 49.5 (consensus
52.0), Chicago PMI fell to its lowest level (49.9%) in October, and below the
50 level, indicating contraction, crude prices up (OIL
PRICES RISE ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling..., all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Phone,
Cable Companies to Battle in 2007 AP
R&D
Shale Oil Extraction Leases Granted AP
Morgan
Stanley CEO Gets $40M 2006 Bonus AP
3
Senior Execs Said to Be Leaving AOL AP
Stock prices inflated at the open after it became
known by way of the November CPI report that inflation is being
contained. Specifically, both total and core-CPI, which excludes food and
energy, were unchanged last month. The market had been expecting 0.2%
increases at both levels, so there was no mistaking that the unchanged readings
were good news, particularly since the year-over-year rate in core-CPI slipped
to 2.6% from 2.7% as a result. In recognition of the encouraging trend,
both stock and bond prices rallied in the early-going on the idea that today's
data enhanced the possibility of a rate cut from the Fed occurring sooner
rather than later. The industrial production report, which showed a 0.2%
increase in the month of November, didn't do anything to alter that belief as
the production trend of late has fit neatly with the Fed's soft landing
scenario. As one might expect, then, stocks started the day on an upbeat note
drawing added support from a noticeable drop in market rates and healthy
leadership from the financial, technology and industrial sectors. Earnings
warnings from Black & Decker (BDK
78.26, -8.66) and Illinois Tool Works (ITW
46.80, -1.12), a continued uptick in oil prices, a lack of participation by the
energy sector, and a sense that the stock market is overbought on a short-term
basis, were among the limiting factors that kept the early gains in
check on this quadruple witching options expiration Friday. Although the stock
market maintained a position in positive territory throughout the session, it
spent a good part of the day seeing the early gains get pared on profit taking
efforts. However, the outperformance of influential blue chip components
like General Electric (GE
37.36, +1.15), Honeywell (HON
43.62, +0.93), Procter & Gamble (PG
64.11, +0.76), Citigroup (C 54.07,
+0.96) and Cisco (CSCO
27.56, +0.25) kept selling efforts in check and the indices above the unchanged
mark. At the end of the day there weren't a lot of big movers from a sector
standpoint, with the exception of Energy (-1.24%) which happened to be the
prior day's biggest gainer. Decliners actually outpaced advancers at the NYSE
and Nasdaq, but the buying interest in large cap issues proved to be the
difference that kept the indices from sporting negative signs at the closing
bell. Volume was heavier than usual which was a function of the increased
trading that took place with the expiration of stock options, index options,
index futures and single stock futures.DJ30 +28.76 NASDAQ +3.35 SP500 +1.60
NASDAQ Dec/Adv/Vol 1616/1456/2.16 bln NYSE Dec/Adv/Vol 1756/1491/1.72 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $63; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-14-06) Suckers bear market rally is nothing less than a defacto fraud by
the lunatic frauds on wall street to suck the suckers in; ie.,
as the Dow Jones industrial average up 99,
Standard & Poor's 500 index up 12,
and the Nasdaq composite index up 21, all very
commissionable on heavy volume as in final pre-election result push for bush, which
fell very short. Investment
Banks Post Record 2006 Profit .....daaaaah! Churning and earning on
worthless paper, where is that commission dollar coming from even as america
has ceded solvency/leadership in every economic measure. Even at the lofty
record numbers the indices are worth roughly half their value based on
precipitous fall of the dollar in only 5 years with further downside to go.
Superstitious ‘Santa Claus rally’.....riiiiight! High oil price
rally.....riiiiight! Total bulls**t ! Retail sales up a very unexpected
1%, riiiiight, at the same time inventories of such goods rising substantially
(do you think they’re booking sales to ‘straw men/companies’.....I do!) and oil
inventories down. Fake employment numbers (from the government.....riiiiight!)
the impetus for previous b.s. rally despite falling sentiment and uptick in
unemployment. The ism services index (financed by unsustainable deficit/debt
spending and pushing/commissioning worthless paper) and jawboning/bulls**t from
the housing industry (the end is near.....riiiiight!), obfuscating mergers
continued to cloud the picture, closely-watched core-PCE deflator had risen a
more than expected 0.2%, second sub-50 reading on manufacturing activity in as
many sessions-the November ISM index unexpectedly fell to 49.5 (consensus
52.0), Chicago PMI fell to its lowest level (49.9%) in October, and below the
50 level, indicating contraction, crude prices up (OIL
PRICES RISE ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling..., all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in September
-- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ]. Philadelphia
Federal Reserve announces that its broadest measure of manufacturing activity
fell to a negative reading for the first time since April 2003, leading
economic indicators fall .2%, and previously fell
.1% though expected to show an increase, and in addition to the larger than
expected 4.1% drop in July existing home sales to its lowest level in over two
years and lifted inventories to record levels , new home sales fell 4.3%, and a
larger than expected 2.4% decline in July durable orders which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
A market that was looking tired yesterday looked as if it had a caffeine fix today for there was no shortage of buying interest. Catalysts for the advance were plentiful and they touched on both technical and fundamental developments. Specifically, buyers were called back into action by a batch of reassuring earnings news, better than expected economic data, and the S&P's ability to clear resistance at the 1420 level. The momentum factor isn't to be dismissed either as the surprising show of strength undoubtedly prompted some short-covering activity and attracted sidelined money that feared missing out on any year-end rally effort. The end result is that the Dow established a new record high while the S&P 500 climbed to a 6-year high on the back of broad-based participation that saw all ten economic sectors finish with a gain. The energy sector (+1.81%) was the pacesetter, rallying in the wake of a controversial decision by OPEC to cut production by another 500K barrels per day starting Feb. 1. That news, and a report of a larger than expected drawdown in natural gas inventories, lit a match under crude prices which advanced $1.18 to $63.35 per barrel. Airlines, as one might expect, hit an air pocket on the move in crude prices and were among a short list of industry laggards that included wireless services, coal & consumable fuel, and steel. The latter group got clipped on news that the ITC agreed to eliminate duties on steel imports from Australia, Canada, France and Japan. The bump in oil prices, though, did little to dissuade market bulls who cheered an affirmation of earnings guidance from several Dow components, including Procter & Gamble (PG 63.35, -0.05) and Honeywell (HON 42.69, +0.83), and solid earnings reports from Bear Stearns (BSC 159.96, +4.07), Lehman Bros. (LEH 76.08, -0.29), Ciena (CIEN 27.83, +2.87) and Costco (COST 54.11, +0.97). Outside of energy, other sector standouts included technology (+1.06%), which was powered by Adv. Micro Devices (AMD 22.71, +2.54) and a hot semiconductor group, and consumer discretionary (+1.09%), which rode the coattails of a strong showing from the retailers. On the economic front, weekly initial claims were lower than expected at 304K (consensus 320K) while the Empire State Index rose to a stronger than expected level of 23.1 (consensus 18.0) that helped assuage some concerns about the slowdown in the manufacturing sector that were piqued when the national ISM Index slipped below 50.0. The Empire index wasn't due out until tomorrow, but it was released early after being inadvertently posted to the New York Fed's website.DJ30 +99.26 NASDAQ +21.44 SOX +1.90% SP500 +12.28 NASDAQ Dec/Adv/Vol 1246/1815/1.84 bln NYSE Dec/Adv/Vol 1152/2157/1.43 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $62; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-13-06) Suckers bear market rally is nothing less than a defacto fraud by
the lunatic frauds on wall street to suck the suckers in; ie.,
as the Dow Jones industrial average up 1,
Standard & Poor's 500 index up 1,
and the Nasdaq composite index up 1, all very
commissionable on heavy volume as in final pre-election result push for bush, which
fell very short. Retail sales up a very unexpected 1%, riiiiight, at the same
time inventories of such goods rising substantially (do you think they’re
booking sales to ‘straw men/companies’.....I do!) and oil inventories down.
Fake employment numbers (from the government.....riiiiight!) the impetus for
previous b.s. rally despite falling sentiment and uptick in unemployment. The
ism services index (financed by unsustainable deficit/debt spending and
pushing/commissioning worthless paper) and jawboning/bulls**t from the housing
industry (the end is near.....riiiiight!), obfuscating mergers continued to
cloud the picture, closely-watched core-PCE deflator had risen a more than
expected 0.2%, second sub-50 reading on manufacturing activity in as many
sessions-the November ISM index unexpectedly fell to 49.5 (consensus 52.0),
Chicago PMI fell to its lowest level (49.9%) in October, and below the 50
level, indicating contraction, crude prices up
(OIL PRICES RISE
ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling..., all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the realtors/government
who have been talking up this bubble market?) albeit at sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade deficit
which was expected to narrow but in fact INCREASED to 69.9 billion. The alice-in-wonderland lunatic wall street frauds rallied on the
news as the dollar precipitously fell. The Fed Chairman said there is a
"substantial correction" in housing, which will probably shave about
1% off growth in the second half of the year. The Institute of Supply
Management said its services index fell to 52.9 in September -- the lowest
level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Airline
Mergers Could Raise Fares in '07 AP
Nearly
450 AOL Employees Are Laid Off AP
Boston
Globe Union Approves New Contract AP
Taco
Bell Sales Hit by E. Coli Outbreak AP
Even though stocks closed in positive territory, the
market struggled to find much direction all afternoon as five months of gains
continued to leave the major averages looking tired. Before the bell, the stage
was set for the underlying bullish tone to resurface following Tuesday's
breather after a surprisingly strong retail sales report boosted investor
confidence about the strength of the U.S. economy. With consumers taking
advantage of holiday discounts, retail sales in November posted their largest
gain (1.0%) since July (consensus 0.2%), as strength in 11 of 13 categories
eased concerns about weakness in the housing market curtailing consumption.
Also indicative of good underlying growth in consumer spending was an even
better 1.1% rise in sales excluding autos. That was the largest increase since
January. Not surprisingly, the biggest beneficiary was Consumer Discretionary.
The sector found some support from a 1.0% gain in one of its biggest
constituents, and Dow component, Home Depot (HD 39.08 +0.38), which confirmed
expansion efforts into China by acquiring The Home Way. Other deal making today
included reports that UAL Corp (UAUA 45.24 +2.01) is in talks to merge with
Continental Airlines (CAL 44.72 +1.84). Such a combination would make it the
world's largest carrier measured by passenger traffic, eclipsing American
Airlines. The latter is owned by AMR Corp (AMR 32.60 +0.60), a suggested
holding in the Briefing.com Active Portfolio. More evidence of industry
consolidation lit a fire under Airlines - today's best performing S&P
industry group (+2.8%). However, a number of analyst downgrades (e.g. CSX
-4.4%, JBHT -2.5%, YRCW -2.1%) and rising oil prices weighed on transportation
stocks, removing leadership from Industrials - today's worst performing
sector. In fact, Energy was the only sector exhibiting any conviction on the
part of buyers. Nonetheless, its advance was largely attributed to crude oil
futures closing higher for the first time in four days, which in turn removed
some of the enthusiasm behind what today's strong retail sales data say about
consumer spending. Had it not been for the sector's leadership as a major
contributor to profit growth on the S&P 500, stocks would have finished
lower. Aside from rising oil prices, a sell-off in Treasuries also left
investors questioning the sustainability of the five-month rally in equities.
The 10-year note plunged 21 ticks, lifting the yield to 4.57%, after strong
retail sales growth diminished hopes of an interest rate cut in early 2007. As
a reminder, the Dow and S&P 500 are up more than 15% from their summer lows
and the Nasdaq is up nearly 21% since mid July. Such impressive performances,
though, have been supported in part by lower oil prices and a decline in
borrowing costs. DJ30 +1.92 NASDAQ +0.81 SP500 +1.66 NASDAQ Dec/Adv/Vol
1540/1525/1.81 bln NYSE Dec/Adv/Vol 1584/1731/1.42 bln.
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $61; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-12-06) Stocks drop still only modestly relative to reality
with suckers bear market rally into the close as the wall street fraud
continues to suck the suckers in; ie., as the Dow Jones industrial average fell
12.90, S&P fell
5.68 ,and NASDAQ fell 11.26 , all very commissionable on heavy volume as in final pre-election result push
for bush, which fell very short. Fake employment numbers (from the
government.....riiiiight!) the impetus for b.s. rally despite falling sentiment
and uptick in unemployment. The ism services index (financed by unsustainable
deficit/debt spending and pushing/commissioning worthless paper) and
jawboning/bulls**t from the housing industry (the end is near.....riiiiight!),
obfuscating mergers continued to cloud the picture, closely-watched core-PCE
deflator had risen a more than expected 0.2%, second sub-50 reading on
manufacturing activity in as many sessions-the November ISM index unexpectedly
fell to 49.5 (consensus 52.0), Chicago PMI fell to its lowest level (49.9%) in
October, and below the 50 level, indicating contraction, crude prices up (OIL PRICES RISE
ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling..., all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must restate
earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Talks
May Signal Airlines' Consolidation AP
E.
Coli Outbreak Said Not Tied to Onions AP
Google
to Open New Stock Option Market AP
SEC
Easing Key Control Rules for Firms AP
Stocks snapped a two-day winning streak Tuesday as
policy makers failing to back down on their inflation concerns and mixed
corporate news left investors questioning the sustainability of a 4 1/2-month
rally. Per usual, all eyes were fixed on today's FOMC meeting. With much of the
market's Q4 rally predicated on the possibility of the Fed easing no later than
March, investors were especially interested to see whether policy makers would
reveal any clues pertaining to the timing of an eventual cut in interest rates.
However, there were almost no changes in the wording of the policy directive,
and thus, no evidence to support the market's optimism that rate cuts are on
the way.The inclusion of the word "substantial" in the statement to
describe the cooling of the housing market garnered some added attention, but
that modifier only seemed to excite bond traders as stocks languished in the
red all afternoon. Fortunately for the bulls, the ensuing rally in
Treasuries that pushed the yield on the 10-year note (+07/32) down
three basis points to 4.49% provided enough of a floor for rate-sensitive bank
stocks to help offset profit taking in two of the Financials sector's biggest
names.With Citigroup (C 52.24 -0.64) up more than 4% over the last two days,
the Dow component merely naming a new COO, but stating there will be no other
management changes, prompted investors to take some money off the table. As
expected, Goldman Sachs (GS 200.19 -2.33) handily topped analysts' expectations
for a fourth straight time. However, the stock succumbed to some profit taking
after having been bid up to the tune of 37% from its September lows in
anticipation of another record quarter.With Financials finishing flat, that
left the second most influential sector in focus -- Technology. As evidenced by
the Nasdaq turning in the day's worst performance among the majors, the absence
of tech leadership weighed on sentiment throughout the session. The biggest
drag on the sector was Apple Computer (AAPL 86.16 -2.59), which dropped
nearly 3% after a report suggested iTunes sales are collapsing. Texas
Instruments (TXN 29.77 +0.47) was another focal point as its lowered Q4
guidance was viewed as benign and even garnered an analyst upgrade. Yet,
it's 1.6% advance was no match for consolidation across the sector. Consumer
Discretionary was another weak spot. Best Buy (BBY 51.29 -2.63), which missed
analysts' earnings expectations, led the way with a 5% decline while Federated
Department Stores (FD 38.00 -1.50) tacking on a 3.8% decline to yesterday's
2.2% downgrade-induced drop placed additional pressure on
retailers. DJ30 -12.90 NASDAQ -11.26 SP500 -1.48 NASDAQ Dec/Adv/Vol
1900/1146/1.95 bln NYSE Dec/Adv/Vol 1865/1412/1.46 bln.
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $61; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-11-06) Waning full moon and roaring suckers bear
market rally is nothing less than a defacto fraud by the lunatic frauds on wall street to suck
the suckers in; ie., as the Dow Jones industrial
average up 20, Standard & Poor's 500
index up 3, and the Nasdaq composite index up 5, all very commissionable on heavy volume as in final
pre-election result push for bush, which fell very short. Fake employment
numbers (from the government.....riiiiight!) the impetus for b.s. rally despite
falling sentiment and uptick in unemployment. Can you imagine that a member of congress actually said that the social security surplus (actually usurped funds used in the general fund and never really extent) has been wiped out, particularly owing to allocations for funding (corporate welfare/profiteering) the illegal Iraq war.....daaaaah! Where do they get these frauds/dummies? The ISM services index (financed
by unsustainable deficit/debt spending and pushing/commissioning worthless
paper) and jawboning/bulls**t from the housing industry (the end is
near.....riiiiight!), obfuscating mergers continued to cloud the picture,
closely-watched core-PCE deflator had risen a more than expected 0.2%, second
sub-50 reading on manufacturing activity in as many sessions-the November ISM
index unexpectedly fell to 49.5 (consensus 52.0), Chicago PMI fell to its lowest
level (49.9%) in October, and below the 50 level, indicating contraction, crude
prices up (OIL PRICES RISE
ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, oil
producers shun the dollar, Russia and Opec shift revenues into euros, yen and
sterling...,all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The know-nothing
pundits are now saying the up move without any rational basis is predicated
upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Nissan:
No Need to Merge With New Partner AP
Drought
Keeps Cotton Crop Down AP
Dow
Ends Up 21 As Investors Wait for Fed AP
Mortgage
Delinquencies a Rising Threat AP
4:20 post meridian : The major averages picked up
where they left off Friday, trading higher, as possible deal making and key
sector leadership helped investors kick off what is expected to be this month's
busiest week of earnings and economic data. However, market gains were modest
at best as participants prepared to turn their focus to Tuesday's
closely-watched FOMC meeting. While it is a foregone conclusion policy makers
will leave rates unchanged for a fourth straight time tomorrow afternoon,
uncertainty as to the wording of the policy directive and whether it will
reveal any clues pertaining to the timing of an eventual cut in interest rates
acted as a bit of an overhang. Helping the bulls temporarily shrug off early
Fed-related nervousness and extend Friday's gains was follow-through buying in
Friday's best performing Dow component -- Citigroup (C 52.83 +0.98). After
surging 2.3% amid speculation of a management change and a possible break-up,
the bellwether bank hit a new 2 1/2-year high after tacking on another 1.9% to
pace the way higher on the price-weighted index. Bank of America (BAC 52.17
+0.51) more than erasing the 1.6% lost a day earlier, an analyst upgrade on JP
Morgan Chase (JPM 47.56 +0.80) and a nearly 1.0% gain for fellow Dow
component American International Group (AIG 71.00 +0.65), which agreed to buy
some Dubai port operations, provided additional sector support. Other potential
deals providing a vote of confidence about future growth included reports that
Sabre Holdings (TSG 30.44 +2.12) is on the auction block and that Smith &
Nephew (SNN 48.32 +0.75) is close to bidding about $11 bln for Biomet (BMET
41.56 +1.66). Telecom was the day's other big gainer, extending its
year-to-date gain to more than 30% after the FCC's top lawyer authorized a
commission member to vote on the proposed multi-billion dollar AT&T (T
35.23 +0.26) and BellSouth (BLS 46.23 +0.37) deal. DJ30 +20.99 NASDAQ +5.50
SP500 +3.20 NASDAQ Dec/Adv/Vol 1493/1556/1.83 bln NYSE Dec/Adv/Vol
1346/1936/1.25 bln
3:30 post meridian : Range-bound trading persists in stocks
as trading enters the final stretch. Seven out of 10 sectors are posting gains,
but turnarounds in Energy and Health Care barely qualify as gains since they're
basically unchanged. Fortunately for the bulls, the bulk of leadership continues
to come from the two most influential S&P sectors -- Financials and
Technology; but it remains to be seen if both can continue to lend enough
support going into the close with uncertainty tied to tomorrow's policy
directive still looming.
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $61; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-08-06) Waning full moon and hence, roaring suckers bear
market rally is nothing less than a defacto fraud by the lunatic frauds on wall street to suck
the suckers in; ie., as the Dow Jones industrial
average up 29, Standard & Poor's 500
index up 2, and the Nasdaq composite index up 5, all very commissionable on heavy volume as in final
pre-election result push for bush, which fell very short. Fake employment
numbers (from the government.....riiiiight!) the impetus for b.s. rally despite
falling sentiment and uptick in unemployment. Can you imagine that a member of congress actually said that the social security surplus (actually usurped funds used in the general fund and never really extent) has been wiped out, particularly owing to allocations for funding (corporate welfare/profiteering) the illegal Iraq war.....daaaaah! Where do they get these frauds/dummies? The ISM services index (financed
by unsustainable deficit/debt spending and pushing/commissioning worthless
paper) and jawboning/bulls**t from the housing industry (the end is
near.....riiiiight!), obfuscating mergers continued to cloud the picture,
closely-watched core-PCE deflator had risen a more than expected 0.2%, second
sub-50 reading on manufacturing activity in as many sessions-the November ISM
index unexpectedly fell to 49.5 (consensus 52.0), Chicago PMI fell to its lowest
level (49.9%) in October, and below the 50 level, indicating contraction, crude
prices up (OIL PRICES RISE
ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The know-nothing
pundits are now saying the up move without any rational basis is predicated
upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
FCC:
McDowell Can Vote on AT&T-Bellsouth
AP - The Federal Communications
Commission's top lawyer on Friday authorized one of its members to vote on the
proposed buyout of BellSouth Corp. by AT&T Inc., despite an apparent
conflict of interest.
American
Proposes Chicago-Beijing Route AP
More
Jobs in Nov., Unemployment Up Too AP
EU
Opens Universal-BMG Antitrust Probe AP
Bank
of America May Buy Barclays AP
After a
choppy start to end the week, investors eventually garnered enough notable
leadership in some key sectors to finally embrace a strong November jobs
report and snap a two-day losing streak for stocks. Given the Fed's
increased policy guidance from "incoming" data, today's employment
report -- the last key piece of data policy makers will get their hands on
before they meet next Tuesday -- garnered added attention. Before the bell, the
Labor Dept. showed that nonfarm payrolls rose 132K in November (consensus 105K)
while payrolls figures for October and September were upwardly revised to
account for a net gain of 42K new jobs. With investors concerned about the pace
of economic growth, continued payroll gains will keep consumer spending rising
at a decent clip against moderate wage growth. Hourly earnings rose just 0.2%,
below the 0.3% economists were anticipating, providing additional evidence of
the Fed's sought after soft landing.With all of the S&P 500's impressive
13% year-to-date advance occurring over the last four months, however, concerns
that the market has gone up too far too fast initially left investors
questioning whether today's solid employment data had already been priced into
equities. Fortunately for the bulls, early trepidation about overbought
conditions was put to rest as the morning played out. After briefly using an
unexpected decline in consumer sentiment as the latest excuse to take some
money off the table, Citigroup (C 51.87 +1.16) spiking to a new 2 1/2-year high
helped lift the indices into the green for good. The Dow component surged 2.3%
amid speculation of a management change and a possible break-up. Perhaps giving
Citigroup an added boost was some rotation out of rival Bank of America (BAC
51.58 -0.91), which Merrill Lynch believes is interested in acquiring Barclays
(BCS 58.53 +2.74). Investors bidding up shares of investment banks in
anticipation that several Wall Street firms (e.g. GS +2.5%, LEH +1.3%, and BSC
+1.0%) will post record earnings results next week provided additional support
for the most influential of S&P sectors -- Financials. U.S. Treasury
Secretary Henry Paulson later praising the payrolls number and saying the
economy is growing at a sustainable clip during a CNBC interview offered investors
an additional vote of confidence. Of the seven other economic sectors trading
higher, Technology was another influential leader to the upside. Two days of
profit taking sparked some bargain hunting interest and helped investors look
past some warnings in the chip space. Xilinx (XLNX 24.83 -1.61) plunged 5.3%
after lowering its Q3 sales forecasts. A 1.9% surge in the sector's largest
component -- Microsoft (MSFT 29.40 +0.55) -- was the biggest reason behind the
sector's outperformance. Investors also applauded a late-day reversal in oil
prices. Crude for January delivery, which was up nearly 2.0% earlier at
two-month highs, closed down 0.6% near $62/bbl. Forecasts of milder weather
conditions trumped concerns earlier in the day about potential supply
disruptions tied to unrest in Nigeria. However, removal of key leadership from
the Energy sector tarnished the earnings potential of a key contributor to
profit growth for the S&P 500 and acted as somewhat of an offset. DJ30
+29.08 NASDAQ +9.67 SP500 +2.55 NASDAQ Dec/Adv/Vol 1507/1546/1.81 bln NYSE
Dec/Adv/Vol 1653/1602/1.28 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $62; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-07-06) Stocks drop still only modestly relative to reality
with suckers bear market rally still intact in shortened session as the wall
street fraud continues to suck the suckers in; ie., as the Dow Jones industrial
average fell 30.84, S&P fell 5.61 ,and
NASDAQ fell 18.71 , all very commissionable
on heavy volume, as in final pre-election result push for bush, which fell very
short. The ism services index (financed by unsustainable
deficit/debt spending and pushing/commissioning worthless paper) and jawboning/bulls**t
from the housing industry (the end is near.....riiiiight!), obfuscating mergers
continued to cloud the picture, closely-watched core-PCE deflator had risen a
more than expected 0.2%, second sub-50 reading on manufacturing activity in as
many sessions-the November ISM index unexpectedly fell to 49.5 (consensus
52.0), Chicago PMI fell to its lowest level (49.9%) in October, and below the
50 level, indicating contraction, crude prices up (OIL
PRICES RISE ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the realtors/government
who have been talking up this bubble market?) albeit at sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade deficit
which was expected to narrow but in fact INCREASED to 69.9 billion. The alice-in-wonderland lunatic wall street frauds rallied on the
news as the dollar precipitously fell. The Fed Chairman said there is a
"substantial correction" in housing, which will probably shave about
1% off growth in the second half of the year. The Institute of Supply
Management said its services index fell to 52.9 in September -- the lowest
level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Monsanto
Makes Moves in Seed Wars AP
Bidders
Vie for Singapore Casino Deal AP
E.
Coli Could Hurt Taco Bell Sales AP
Factory
Blast May Affect Gear Supply AP
As is typically the case heading into the
closely-watched monthly employment report, market breadth throughout most of
the session reflected a sense of nervousness and prevented the bulls from
stepping back in following yesterday's breather. With Fed Chairman Bernanke
recently acknowledging that extra attentiveness will be placed on incoming
employment data (i.e. rising wages), worries that Friday's jobs report won't
provide enough conviction to support the soft landing scenario that has been
priced into stocks since July left investors questioning the sustainability of
recent market gains. As a result, the best performing sectors over the last 4
1/2 months were among the hardest hit today. With the Nasdaq outpacing its blue
chip counterparts since the summer, it wasn't all that surprising to see profit
taking in everything from semiconductors to software to leave Technology as
today's biggest laggard. Adding insult to injury was a 3.0% sell-off in one of
the sector's biggest names -- Apple Computer (AAPL 87.03 -2.80). CIBC World
Markets said Apple's highly anticipated iPhone rollout may be delayed.
Following three straight days of declines, some short covering in crude oil
futures heading into the close of trading on the NYMEX also kept buyers
sidelined. Crude for January delivery closed up 0.5% near $62.50/bbl. More
notably was the inability by refiners, drillers and explorers to take notice as
the Energy sector was still among today's poorest performers. Consumer
Discretionary was also a focal point Thursday, especially after an internal
investigation showed that Home Depot (HD 38.93 -0.99), the day's worst performing
Dow component, understated stock option expense by $200 mln. The sector was
also under pressure as valuation concerns prompted Credit Suisse to downgrade
the homebuilding group. One of the sector's only bright spots was News Corp
(NWS 22.36 +0.62). The stock, which is also a suggested holding in our Active
Portfolio, surged nearly 3% amid reports that it is close to finalizing a deal
to swap its interest in DirecTV for Liberty Media's $11 bln stake in NWS. DJ30
-30.84 NASDAQ -18.17 SP500 -5.61 NASDAQ Dec/Adv/Vol 1888/1181/2.07 bln NYSE
Dec/Adv/Vol 1941/1312/1.37 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $62; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-06-06) Stocks drop still only modestly relative to reality
with suckers bear market rally still intact as the wall
street fraud continues to suck the suckers in; ie., as the Dow Jones industrial
average fell 22.35, S&P fell 1.86 ,and
NASDAQ fell 6.52 , all very commissionable
on heavy volume, as in final pre-election result push for bush, which fell very
short. The ism services index (financed by unsustainable
deficit/debt spending and pushing/commissioning worthless paper) and jawboning/bulls**t
from the housing industry (the end is near.....riiiiight!), obfuscating mergers
continued to cloud the picture, closely-watched core-PCE deflator had risen a
more than expected 0.2%, second sub-50 reading on manufacturing activity in as
many sessions-the November ISM index unexpectedly fell to 49.5 (consensus
52.0), Chicago PMI fell to its lowest level (49.9%) in October, and below the
50 level, indicating contraction, crude prices up (OIL
PRICES RISE ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the realtors/government
who have been talking up this bubble market?) albeit at sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy) of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought, overvalued,
overfrauded, over,
etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade deficit
which was expected to narrow but in fact INCREASED to 69.9 billion. The alice-in-wonderland lunatic wall street frauds rallied on the
news as the dollar precipitously fell. The Fed Chairman said there is a
"substantial correction" in housing, which will probably shave about
1% off growth in the second half of the year. The Institute of Supply
Management said its services index fell to 52.9 in September -- the lowest
level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Fannie
Mae Erases $6.3 Billion in Profit
AP - Fannie Mae erased $6.3 billion in profit in a long-awaited restatement
Wednesday capping the accounting scandal that stunned financial markets and
brought the ouster of top executives and a record fine against the government-sponsored
mortgage leader.
Dow
Closes Down 22, Nasdaq Closes Down 7 AP
Yahoo
Makes Major Organizational Changes AP
Home
Depot Finds $200M in Option Expense AP
Must-Have
Holiday Gifts Not Easy to Find AP
With the S&P 500 closing at a
fresh six-year high a day earlier and the Dow turning in a two-day gain nearly
equivalent to last month's 1.2% performance, stocks struggled to get over the
hump Wednesday. Contributing to the sense of lethargy that kept stocks in a
relatively tight trading range throughout the session was simply a lack of market-moving
data to keep the bulls on the buying track. With drug companies a focal point
of late, and the absence of any scheduled economic reports placing even more
emphasis on corporate news, the biggest announcement today came from Merck (MRK
44.62 -0.39). However, with investors bidding up shares of the Dow component to
the tune of 45% this year in anticipation of improving fundamentals, merely
reaffirming its full-year EPS outlook and guiding fiscal 2007 in line with Wall
Street forecasts gave investors little to get excited about. Another notable
headline was a management shake-up at Yahoo! (YHOO 26.85 -0.58). However, since
the surprise resignation of three executives and promotion of its CFO added to
uncertainty already surrounding the tech laggard, investors didn't exactly
applaud that news either. Adding insult to injury within the Technology sector
was a 5% sell-off in another one of its most influential components -- Oracle
(ORCL 17.85 -1.01). After hitting a new 52-week high three weeks ago, Lehman Brothers
told investors to take some profits. Even though oil prices only closed
slightly lower, Energy pacing with way to the downside among the six sectors
losing ground removed some notable leadership as well. Not to mention, the
sector's biggest disappointment happened to be the largest U.S. company by
market capitalization -- Exxon Mobil (XOM 76.34 -1.72). The Dow component's
2.2% decline accounted for roughly two-thirds of the price-weighted index's
22-point pullback. DJ30 -22.35 DJTA -0.8% DJUA -0.7% DOT -0.6% NASDAQ -6.52 SOX
+0.4% SP500 -1.86 NASDAQ Dec/Adv/Vol 1627/1395/1.91 bln NYSE Dec/Adv/Vol
1840/1454/1.47 bln
(12-05-06) Blazing full moon and hence, roaring suckers bear
market rally is nothing less than a defacto fraud by the lunatic frauds on wall street to suck
the suckers in; ie., as the Dow Jones industrial
average up 47, Standard & Poor's 500
index up 5, and the Nasdaq composite index up 3, all very commissionable on heavy volume as in final
pre-election result push for bush, which fell very short. The ism services
index (financed by unsustainable deficit/debt spending and
pushing/commissioning worthless paper) and jawboning/bulls**t from the housing
industry (the end is near.....riiiiight!), obfuscating mergers continued to
cloud the picture, closely-watched core-PCE deflator had risen a more than
expected 0.2%, second sub-50 reading on manufacturing activity in as many
sessions-the November ISM index unexpectedly fell to 49.5 (consensus 52.0),
Chicago PMI fell to its lowest level (49.9%) in October, and below the 50
level, indicating contraction, crude prices up (OIL PRICES RISE
ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy)of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this indisputable
secular bear market, particularly with the existing unprecedented structural
economic problems, ie., trade and budget deficits,
worthless dollar, scandals, fraud, corruption , etc.. In fact, unemployment
unexpectedly rose substantially and consumer sentiment unexpectedly but
similarly realistically fell, both very negative exept
in the fraudulent
alice-in-wonderland world of wall street. Indeed, the
housing bubble bursting with ie.,
unexpected 14% decline in starts/permits, etc., led to rally in the fraudulent alice-in-wonderland world of wall street. Obfuscating
mergers help preclude detection of this massive and pervasive fraud which
defies analysis owing to these mergers. New talking pointing: dell numbers
exceed expectations depending upon ongoing government scrutiny of their
accounting practices.....riiiiight! More contrived
manipulated markets and data well as that previous unexpected rise in that
global hub of manufacturing activity, New York (worthless paper is their real
product, etc.) …..riiiiight!….. underpins
fraudulent up move. Reassuring Fed speak, also known as b**l s**t, along with IPO’s (get the suckers in at the highs as in
late 90’s market bubble), and shrugging off pervasive stock/options fraud as
at, ie., KB Homes,
etc., leave stocks ridiculously higher. Nations leaving the worthless dollar in droves for
currencies backed by value and for precious metals. Based on the
self-interested statement of typical fraud american
and fed rep, we hear once again the wishful thought that housing has
bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Productivity
Up 0.2 Percent in 3rd Qtr. AP
U.S.
Service Economy Expands in November AP
Oil
Prices Steady As Market Eyes OPEC AP
GM
to Make Rollover Protection Standard AP
While paling in comparison to Monday's impressive
rally, more evidence that the U.S. economy is on pace for a soft landing
provided a floor of modest buying support from the opening bell to the close of
trading. Albeit not a major economic report, today's ISM services data
attracted more attention than usual since the ISM manufacturing index turned in
a sub-50 reading last Friday for the first time in more than three years. So,
when the Institute of Supply Management at 10:00 ET said its services index in
November unexpectedly rose to 58.9 -- the highest level since May
-- stocks spiked to their best levels of the morning. Another economic
release that seldom has a significant impact on the market but helped provide a
floor of support for stocks Tuesday was the revision to Q3 productivity. With
Fed Chairman Bernanke saying last week there is a risk that rising wages could
feed inflation as businesses pass on higher costs to customers, unit labor
costs rising just 2.3% (consensus 3.2%) from a prior read of 3.8% removed some
of that concern. As a reminder, the Fed reconvenes one week from today.
This morning's "incoming" data lent more support for policy makers to
remain on hold. Also helping to keep the month of December's reputation intact
as the best month of the year for the S&P 500 was solid industry
leadership across the board. Of the 10 sectors trading higher, Consumer
Discretionary paced the way. Comcast Corp. (CMCSA 41.92 +1.09) hit a new
52-week and was among the sector's most influential movers (+2.6%) after saying
last night it expects to post solid Q4 earnings. Dow component and suggested
holding in the Briefing.com Active Portfolio, Walt Disney (DIS 34.15 +0.71),
was another bright spot. The stock surged 2.2% to a new multi-year high
following "very bullish" CFO commentary about growth prospects in
2007. Homebuilders provided additional sector support after Toll Brothers' (TOL
32.86 +0.95) hinted that a floor is forming in some housing markets. Restaurants
also attracted buyers, getting a lift following an analyst upgrade on Starbucks
(SBUX 36.81 +1.06) and after J.P. Morgan affirmed McDonald's (MCD 42.81 +0.31),
another suggested holding in the Briefing.com Active Portfolio, as its top
large-cap pick. The Consumer Staples sector ranked second on the day in terms
of performance. Coca-Cola (KO 47.97 +1.14) was the day's best performing Dow
component (+2.4%) after Merrill Lynch raised its stock price target on the
beverage giant to $51 from $48. Aside from strength in Beverages, the Food
Retail group got a boost after Kroger (KR 23.44 +1.11) raised its earnings
growth guidance for fiscal 2006 to 8-10% from 6-8%.Even though consolidation
throughout Treasuries lifted borrowing costs across the yield curve, the
rate-sensitive Financials sector garnered enough strength from some key
components to extend its year-to-date gain to more than 13%. Aside from
continued momentum in brokers and banks, among the most notable individual
winners was an insurance giant. Prudential Financial (PRU 84.24 +2.00) hit a
new 52-week high after issuing an encouraging outlook for 2007, which plays
into our Overweight rating on the sector. BTK +0.1% DJ30 +47.75 DJTA +1.0% DJUA
+0.3% NASDAQ +3.99 NQ100 +0.3% R2K +0.2% SOX +0.8% SP400 +0.2% SP500 +5.64 XOI
+0.8% NASDAQ Dec/Adv/Vol1490/1607/1.97bln NYSE Dec/Adv/V1222/2031/1.43 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $62; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-05-06) Blazing full moon and hence, roaring suckers bear
market rally is nothing less than a defacto fraud by the lunatic frauds on wall street to suck
the suckers in; ie., as the Dow Jones industrial
average up 47, Standard & Poor's 500
index up 5, and the Nasdaq composite index up 3, all very commissionable on heavy volume as in final
pre-election result push for bush, which fell very short. The ism services
index (financed by unsustainable deficit/debt spending and
pushing/commissioning worthless paper) and jawboning/bulls**t from the housing
industry (the end is near.....riiiiight!), obfuscating mergers continued to
cloud the picture, closely-watched core-PCE deflator had risen a more than
expected 0.2%, second sub-50 reading on manufacturing activity in as many
sessions-the November ISM index unexpectedly fell to 49.5 (consensus 52.0),
Chicago PMI fell to its lowest level (49.9%) in October, and below the 50
level, indicating contraction, crude prices up (OIL PRICES RISE
ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy)of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious metals.
Based on the self-interested statement of typical fraud american
and fed rep, we hear once again the wishful thought that housing has
bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is tantamount
to a wasteful tax on the economy. Even token Christian paulison
from jew fraud wall street couldn't stem the tide
against the blatent zionist/neocon/bush
co failure accross the board as the wall street
frauds show record profits financed, albeit indirectly, by huge deficits, both
trade and budget. Obfuscating mergers blur the picture to provide cover for up
move talking points in defiance of reality. Stagflation and
full employment revisions pre-election.....riiiiight. Productivity comes in at a less than
expected 0 (inflationary). The only surprise should have been that the number
wasn't negative. The pundits are now saying that the market/wall street fraud
is in a state of denial regarding economic fundamentals and that the market is
substantially overbought, overvalued, overfrauded, over, etc., the manufacturing index coming in lower than
expectations. Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core
inflation rate report good …..riiiiight…..but savings rate still negative and walmart sales/profits/outlook
substantially below expectations but what the heck, they’re wallstreet lunatics/frauds and
reality is no problem. Despite pre-election deficit spending, GNP comes in a
less than expected paltry 1.6% increase with worthless falling dollar the
catch-22 precluding reality avoidance and the worst yet to come. More nations
leaving the worthless dollar as reserve currency even as frauds on wall street
reach new highs (What are they smoking? Coking? or like the dollar just cracking) based on corporate welfare
flows with money the nation doesn't have pre-election (record deficits).
Housing prices continue their sharp decline as bubble deflates. GM only lost
115 million. Ford lost 5.8 billion and must restate earnings back to year 2000
is a bullish sign in the fraudulent alice-in-wonderland lunatic world of wall
street. Typical
pre-fed meeting rally to provide a cushion for any negative pronouncements
which reality would require but are seldom forthcoming by the accommodative
frauds who have similarly embraced unreality.
Indeed, the gutless wimps of wall street think they're "tough" when they fraudulently
take the market higher despite a clearly contrary fact based reality.
Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Productivity
Up 0.2 Percent in 3rd Qtr. AP
U.S.
Service Economy Expands in November AP
Oil
Prices Steady As Market Eyes OPEC AP
GM
to Make Rollover Protection Standard AP
While paling in comparison to Monday's impressive
rally, more evidence that the U.S. economy is on pace for a soft landing
provided a floor of modest buying support from the opening bell to the close of
trading. Albeit not a major economic report, today's ISM services data
attracted more attention than usual since the ISM manufacturing index turned in
a sub-50 reading last Friday for the first time in more than three years. So,
when the Institute of Supply Management at 10:00 ET said its services index in
November unexpectedly rose to 58.9 -- the highest level since May
-- stocks spiked to their best levels of the morning. Another economic
release that seldom has a significant impact on the market but helped provide a
floor of support for stocks Tuesday was the revision to Q3 productivity. With
Fed Chairman Bernanke saying last week there is a risk that rising wages could
feed inflation as businesses pass on higher costs to customers, unit labor
costs rising just 2.3% (consensus 3.2%) from a prior read of 3.8% removed some
of that concern. As a reminder, the Fed reconvenes one week from today.
This morning's "incoming" data lent more support for policy makers to
remain on hold. Also helping to keep the month of December's reputation intact
as the best month of the year for the S&P 500 was solid industry
leadership across the board. Of the 10 sectors trading higher, Consumer
Discretionary paced the way. Comcast Corp. (CMCSA 41.92 +1.09) hit a new
52-week and was among the sector's most influential movers (+2.6%) after saying
last night it expects to post solid Q4 earnings. Dow component and suggested
holding in the Briefing.com Active Portfolio, Walt Disney (DIS 34.15 +0.71),
was another bright spot. The stock surged 2.2% to a new multi-year high
following "very bullish" CFO commentary about growth prospects in
2007. Homebuilders provided additional sector support after Toll Brothers' (TOL
32.86 +0.95) hinted that a floor is forming in some housing markets.
Restaurants also attracted buyers, getting a lift following an analyst upgrade
on Starbucks (SBUX 36.81 +1.06) and after J.P. Morgan affirmed McDonald's (MCD
42.81 +0.31), another suggested holding in the Briefing.com Active Portfolio,
as its top large-cap pick. The Consumer Staples sector ranked second on the day
in terms of performance. Coca-Cola (KO 47.97 +1.14) was the day's best
performing Dow component (+2.4%) after Merrill Lynch raised its stock price
target on the beverage giant to $51 from $48. Aside from strength in Beverages,
the Food Retail group got a boost after Kroger (KR 23.44 +1.11) raised its
earnings growth guidance for fiscal 2006 to 8-10% from 6-8%.Even though
consolidation throughout Treasuries lifted borrowing costs across the yield
curve, the rate-sensitive Financials sector garnered enough strength from some
key components to extend its year-to-date gain to more than 13%. Aside
from continued momentum in brokers and banks, among the most notable individual
winners was an insurance giant. Prudential Financial (PRU 84.24 +2.00) hit a
new 52-week high after issuing an encouraging outlook for 2007, which plays
into our Overweight rating on the sector. BTK +0.1% DJ30 +47.75 DJTA +1.0% DJUA
+0.3% NASDAQ +3.99 NQ100 +0.3% R2K +0.2% SOX +0.8% SP400 +0.2% SP500 +5.64 XOI
+0.8% NASDAQ Dec/Adv/Vol1490/1607/1.97bln NYSE Dec/Adv/V1222/2031/1.43 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $62; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-04-06)
Blazing full moon and hence, roaring suckers bear market rally is
nothing less than a defacto fraud by the lunatic frauds on wall street to
suck the suckers in; ie.,
as the Dow Jones industrial average up 89.72,
Standard & Poor's 500 index up 12.41, and the Nasdaq
composite index up 35.18, all very commissionable on heavy volume as in final
pre-election result push for bush, which fell very short. The obfuscating
mergers continued to cloud the picture, closely-watched core-PCE deflator had risen a more than
expected 0.2%, second sub-50 reading on manufacturing activity in as many
sessions-the November ISM index unexpectedly fell to 49.5 (consensus 52.0),
Chicago PMI fell to its lowest level (49.9%) in October, and below the 50
level, indicating contraction, crude prices up (OIL PRICES RISE ABOVE $63 A
BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke
& Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall
street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other words,
no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy)of worthless
american paper now being shunned by more rational
market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Stocks
Falter After Downbeat ISM Report AP
Manufacturing
Sector Shrinks in November AP
EADS
Board Approves Mid-Sized Airbus AP
Bank
of America CFO De Molina to Resign AP
According to the Stock Trader's Almanac, December has
historically been the best month for the S&P 500, turning in an average
1.7% gain. However, with the broader market just a day removed from extending
its winning streak to six months, and up more than 14% from its mid-July
bottom, another sign of economic weakness left investors questioning whether a
typical year-end rally was still possible. It is worth noting, though, that a
renewed wave of bargain hunting heading into the final stretch pared losses
across every sector to at least close the indices at their best levels of the
afternoon. At their lows of the session the Dow, S&P 500 and Nasdaq were
down 1.08%, 1.04% and 1.60%, respectively, but finished the first day of
December down just 0.2%, 0.3%, and 0.8%. Among the biggest obstacles for the
bulls to overcome Friday was the second sub-50 reading on manufacturing
activity in as many sessions. At 10:00 ET, the November ISM index unexpectedly
fell to 49.5 (consensus 52.0). With Thursday's disappointing Chicago PMI report
already underpinning a sense of nervousness at the onset of trading, the more
influential ISM Index showing contraction for the first time in more than three
years gave investors the green light to take some more money off the table and
acted as an overhang throughout the day. Even though fed funds futures now
price in nearly a 100% chance the Fed will cut interest rates to 5.0% by March,
up from 73% likelihood before the ISM data, more proof that the manufacturing
sector will not provide much boost to economic growth in the months ahead did
little to attract buying interest in anything other than bonds. In fact, of the
only three sectors trading higher, the rate-sensitive Utilities sector was the
day's best performer before it was eventually surpassed by Energy late in the
day in sympathy with a rebound in oil prices. For the fifth straight day, oil
prices closed higher; but it wasn't until late in the day that investors
finally returned to the very sector -- Energy -- that has been the only notable
source of support for stocks all week. One rate-sensitive area that failed to
take advantage of the decline in borrowing costs across the yield curve was
Financials. The absence of its leadership was noteworthy. The yield on
the 10-year note was as low as 4.40%, leaving it flat on the year, but closed
at 4.43%. With investment banks hitting historic highs last month (e.g. GS,
MER, BSC), the "soft landing" scenario coming into question following
the disappointing ISM data prompted investors to take some profits. As
evidenced by the Nasdaq turning in the day's worst performance among the majors,
Technology was the biggest thorn in the bulls' side. However, with the Nasdaq
up more than 20% after bottoming out in mid July, it wasn't surprising to see
investors rotate some money out of one of the best performers (tech) over the
last few months. Among the sector's biggest laggards was Intel (INTC 20.93
-0.47), the day's worst performing Dow component. Be that as it may, its
2.2% pullback still leaves the stock, which is also a recommended holding in
Briefing.com's Active Portfolio, up nearly 25% from its July low. DJ30 -27.80
NASDAQ -18.56 SP500 -3.91 NASDAQ Dec/Adv/Vol 1889/1165/2.02 bln NYSE
Dec/Adv/Vol 1828/1481/1.76 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $62; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(12-01-06)
Stocks drop still only modestly relative to reality and rally into the close to
end lower as the wall street fraud continues to suck the suckers in; ie.,
as the Dow Jones industrial average fell 27.80, Standard &
Poor's 500 index down 3.92 and the Nasdaq composite index
down 18.56, all very commissionable on heavy volume
as in final pre-election result push for bush, which fell very short. The
closely-watched core-PCE deflator rose a more than expected 0.2%, second sub-50
reading on manufacturing activity in as many sessions-the November ISM index
unexpectedly fell to 49.5 (consensus 52.0), Chicago PMI fell to its lowest
level (49.9%) in October, and below the 50 level, indicating contraction, crude
prices up (OIL PRICES RISE
ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other words,
no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy)of worthless
american paper now being shunned by more rational
market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Stocks
Falter After Downbeat ISM Report AP
Manufacturing
Sector Shrinks in November AP
EADS
Board Approves Mid-Sized Airbus AP
Bank
of America CFO De Molina to Resign AP
According to the Stock Trader's Almanac, December has
historically been the best month for the S&P 500, turning in an average
1.7% gain. However, with the broader market just a day removed from extending
its winning streak to six months, and up more than 14% from its mid-July
bottom, another sign of economic weakness left investors questioning whether a
typical year-end rally was still possible. It is worth noting, though, that a
renewed wave of bargain hunting heading into the final stretch pared losses
across every sector to at least close the indices at their best levels of the
afternoon. At their lows of the session the Dow, S&P 500 and Nasdaq were
down 1.08%, 1.04% and 1.60%, respectively, but finished the first day of
December down just 0.2%, 0.3%, and 0.8%. Among the biggest obstacles for the
bulls to overcome Friday was the second sub-50 reading on manufacturing
activity in as many sessions. At 10:00 ET, the November ISM index unexpectedly
fell to 49.5 (consensus 52.0). With Thursday's disappointing Chicago PMI report
already underpinning a sense of nervousness at the onset of trading, the more
influential ISM Index showing contraction for the first time in more than three
years gave investors the green light to take some more money off the table and
acted as an overhang throughout the day. Even though fed funds futures now
price in nearly a 100% chance the Fed will cut interest rates to 5.0% by March,
up from 73% likelihood before the ISM data, more proof that the manufacturing
sector will not provide much boost to economic growth in the months ahead did
little to attract buying interest in anything other than bonds. In fact, of the
only three sectors trading higher, the rate-sensitive Utilities sector was the
day's best performer before it was eventually surpassed by Energy late in the
day in sympathy with a rebound in oil prices. For the fifth straight day, oil
prices closed higher; but it wasn't until late in the day that investors
finally returned to the very sector -- Energy -- that has been the only notable
source of support for stocks all week. One rate-sensitive area that failed to
take advantage of the decline in borrowing costs across the yield curve was
Financials. The absence of its leadership was noteworthy. The yield on
the 10-year note was as low as 4.40%, leaving it flat on the year, but closed
at 4.43%. With investment banks hitting historic highs last month (e.g. GS,
MER, BSC), the "soft landing" scenario coming into question following
the disappointing ISM data prompted investors to take some profits. As
evidenced by the Nasdaq turning in the day's worst performance among the majors,
Technology was the biggest thorn in the bulls' side. However, with the Nasdaq
up more than 20% after bottoming out in mid July, it wasn't surprising to see
investors rotate some money out of one of the best performers (tech) over the
last few months. Among the sector's biggest laggards was Intel (INTC 20.93
-0.47), the day's worst performing Dow component. Be that as it may, its
2.2% pullback still leaves the stock, which is also a recommended holding in
Briefing.com's Active Portfolio, up nearly 25% from its July low. DJ30 -27.80
NASDAQ -18.56 SP500 -3.91 NASDAQ Dec/Adv/Vol 1889/1165/2.02 bln NYSE
Dec/Adv/Vol 1828/1481/1.76 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $63; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-30-06)
Stocks drop still only modestly relative to reality and rally into the close to
end mixed as the wall street fraud continues to suck the suckers in; ie.,
as the Dow Jones industrial average fell 4, Standard & Poor's 500 index up 1, and the Nasdaq composite index
down .46,all very
commissionable on heavy volume as in final pre-election result push for bush,
which fell very short. The closely-watched core-PCE deflator rose a more than
expected 0.2%, Chicago PMI fell to its lowest level (49.9%) in October, and
below the 50 level, indicating contraction, crude prices up (OIL PRICES RISE
ABOVE $63 A BARREL...), DOLLAR
RESUMES SLIDE, Fed Chairman Bernanke &
Co. cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable
goods orders fell sharply, sentiment down, but supposedly used home sales rose
slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other
words, no good news to justify the ridiculous up move by the alice-in-wonderland
frauds of wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy)of
worthless american paper now being shunned by more
rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing government
scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave stocks ridiculously higher. Nations leaving the
worthless dollar in droves for currencies backed by value and for precious
metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought
that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded, over, etc., the manufacturing index coming in lower than expectations.
Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core inflation rate report good …..riiiiight…..but savings rate still
negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent alice-in-wonderland lunatic world
of wall street. Typical pre-fed meeting rally to provide a cushion for any negative
pronouncements which reality would require but are seldom forthcoming by the
accommodative frauds who have similarly embraced unreality. Indeed, the gutless wimps of wall
street think they're "tough" when
they fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with
sell off, ignoring pervasive options scandal/fraud and rallies Merck despite
lower than expectation results.....riiiiight! Election year corporate welfare to prime the pump and the
mock stock market with money the nation doesn’t have (increasing already huge
deficits). CPI figures (upon which government inflation adjusted payment
obligations are based) lower than expected…..riiiiight! Intel earnings/revenues down sharply but according to the
lunatic frauds on wall street, beat expectations and stock rallies along with
yahoo which as in the pre-dot com bust days says better days are a coming….. riiiiight Core inflation rate
which is closely watched by the Fed exceeds all expectations. Fraud Merrill
Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland
lunatic wall street
frauds rallied on the news as the dollar precipitously fell. The Fed Chairman
said there is a "substantial correction" in housing, which will
probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of style
because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight! What about the reality
of u.s. debt service
at a record unsustainable $2 billion per day on a revolving $2 trillion charge
account with ie.,
China, etc.. The fact that foreclosures are up and that there is projected new
trade deficit record, fake government inflation numbers for election year
purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as
they print more worthless dollars to finance deficits, etc. ) is money in the bank for the
frauds on wall street when they unwind said irrational positions ].
Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland lunatic world
of wall street where same is greeted as good news as also follows with b**l s**t
from Yahoo (which didn’t even reference the record unanticipated trade gap):
Study:
U.S. Workers Prefer PPOs, HMOs AP
S.Korea
Finds Bones in U.S. Beef Order AP
Philly
Papers, Union to Continue Talks AP
Oil
Prices Fall Under $63 a Barrel AP
The market garnered some afternoon bargain-hunting
interest and enjoyed leadership from some key sectors to lift stocks to session
highs late in the day. Two straight sessions of recouping some of
Monday's widespread sell-off, however, left stocks looking lethargic as
all three major averages finished relatively unchanged. Before the bell, the
Commerce Dept. showed that the closely-watched core-PCE deflator rose 0.2%.
That was a bit disappointing since only a 0.1% increase was expected. Given the
report's ability to influence the market's mentality on consumer spending
activity and the Fed's thinking on monetary policy, a higher than expected read
on the central bank's favored inflation gauge left the year/year increase at an
"uncomfortably high" rate of 2.4%. Throw in the fact that oil prices
were eclipsing $63/bbl, November same-store sales were rather disappointing,
and a discouraging update on regional manufacturing activity, and it was
little surprise to see that the market lost the momentum it
showed at the onset of trading. The Chicago PMI fell to its lowest level
(49.9%) in October, and below the 50 level, indicating contraction in the
Midwest region. Since the PMI has the highest correlation with the most
influential of all the manufacturing surveys -- tomorrow's national ISM Index
-- the lowest PMI reading in more than three years renewed concerns that
manufacturing may be entering a downturn. Meanwhile, Treasuries rallied on the
report as it provided more evidence of an economic slowdown. However, even
though the yield on the 10-yr note closed below 4.5% (at 4.45%) for the first
time since January, the inability of the rate-sensitive Financials sector to
take advantage also acted as an overhang throughout the session. Of the seven
sectors closing higher, Energy was again the main reason stocks were doing as
well as they were late in the day since the sector's leadership as a profit
engine for the S&P 500 temporarily helped investors look beyond crude oil's
potential inflationary characteristics. As was the case yesterday, Exxon Mobil
(XOM 76.81 +0.78) and Chevron (CVX 72.32 +1.27) hitting new historic highs
acted as the biggest sources of support for the broader market. Crude for
January delivery, up as much as 2.1% at $63.75/bbl, closed up about 0.9% at
two-month highs near $63/bbl amid reports of cold weather sweeping across the
country.Health Care also provided some notable leadership, getting its biggest
lift from a 1.6% surge in the sector's most influential constituent, and Dow
component, Pfizer (PFE 27.50 +0.43). The drug giant raised its fiscal 2006 EPS
outlook. Strength in HMOs and Distributors, two of today's top five performing
S&P industry groups, lent some additional sector support.With investors
focused on how well the holiday shopping period is developing, the Consumer
Discretionary was also in focus Thursday as investors sifted through a plethora
of November same-store sales figures. The majority of retailers missing
analysts' expectations underpinned some nervousness about the health of the
consumer. Among the biggest names tumbling after coming up short of Wall
Street's forecasts were Kohl's (KSS 69.54 -1.14), JC Penney (JCP 77.41 -2.19),
Gap (GPS 18.74 -0.33) and Nordstrom (JWN 49.00 -1.41).Dow component Wal-Mart
(WMT 46.08 -0.81) also lost ground after it confirmed a 0.1% decrease
in Nov. comps, the first decline in a decade, and said Dec. comps will be flat
to up 1.0%. It is worth noting that Wal-Mart is actually a constituent of
Consumer Staples, which turned in the day's worst performance. DJ30 -4.80
NASDAQ -0.46 SP500 +1.15 NASDAQ Dec/Adv/Vol 1425/1626/2.09 bln NYSE Dec/Adv/Vol
1202/2084/1.93 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $63; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-29-06) Suckers bear
market rally is nothing less than a defacto fraud by the
lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial average up 90, Standard & Poor's 500 index up 12, and the Nasdaq composite index up 19, all very commissionable on heavy volume as in
final pre-election result push for bush, which fell very short. Fed
Chairman Bernanke & Co.
cheerleading/jawboning/bulls**t, 3.2% decline in new home sales, oil
inventories down and oil prices up, all very bad news anywhere but in the fraudulent alice-in-wonderland world of wall street. Durable goods orders fell sharply, sentiment down,
but supposedly used home sales rose slightly (riiiiight.....who
says; the realtors/government who have been talking up this bubble market?)
albeit at sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW
In other words, no
good news to justify the ridiculous up move by the
Ford
Says 38,000 Accepted Buyout Offers
AP - Ford's hourly work force is shrinking to half its current size,
following the announcement Wednesday that 38,000 hourly workers have agreed to
accept early retirement or buyout packages this year.
Stocks
End Higher on Positive GDP Report AP
TiVo Posts Narrower Loss, Beating Views AP
Economy
Expands by 2.2 Percent in 3Q AP
Oil
Prices Fall Slightly in Asia AP
For a second straight
day, the bulls returned to recoup some of the extensive losses that stocks
endured on Monday, closing the major averages near session highs. Today's
anecdote for another recovery consisted of a stronger than expected upward
revision to Q3 GDP growth, and some upbeat corporate news as well as strong
leadership from all 10 economic sectors.With
investors still preoccupied with the pace of economic growth, the Commerce
Dept. showed the U.S. economy grew at a faster than expected 2.2% pace
(consensus 1.8%), up from an advance read of 1.6%, without stoking inflation. A
measure of inflation watched by the Fed was revised lower to 2.2% from 2.3%.
Since the GDP data support Fed Chairman Bernanke's
upbeat comments a day earlier on the economy and offer more evidence that the
soft landing is on track, the underlying bullish tone responsible for lifting
stocks virtually unabated since mid July resurfaced. Advancers on the NYSE
enjoyed a nearly 4-to-1 margin over decliners while those on the Nasdaq held a 2-to-1 advantage.From
a sector standpoint, Energy (+2.9%) again provided the bulk of market support,
as its potential to generate strong profit growth for the S&P 500 helped
investors look past oil's potential inflationary characteristics. Crude for
January delivery closed up 2.4% at $62.46/bbl following unexpected declines in
weekly distillate and gasoline inventories. Exxon Mobil (XOM 76.06 +1.90) and
Chevron (CVX 71.49 +1.61) surged to new historic highs.The
Consumer Discretionary sector also provided some notable leadership, getting a
lift from several areas. Publishers advanced amid reports that billionaire and
former AIG CEO Maurice Greenberg is eyeing a takeover of New York Times (NYT
24.74 +1.71). Another one of the day's best performers on the S&P 500 was
Tiffany & Co. (TIF 38.20 +2.27), which surged more than 6% after topping
Wall Street expectations and issuing upside EPS guidance for fiscal 2007. With
a plethora of November same-store sales reports hitting the wires tomorrow
morning, Tiffany's solid report provided some comfort. Homebuilders also
provided sector support as investors looked past a 3.2% decline in new home
sales and focused more on the fact that median prices rose 1.9% in October
after falling sharply in September.Separately, the
Beige Book to be used at the Fed's December 12 policy meeting showed that
consumer spending in most districts increased during October and early November
and that the retail sales outlook for the holiday season was
"cautiously optimistic." While the report initially had little impact
on stocks, most districts reporting continued moderate growth without evidence
of growing inflation pressures eventually helped provide a floor of support for
investors dealing with oil prices closing above $62/bbl for the first time in
two months.As a reminder, Fed Chairman Bernanke noted Tuesday that
some of the factors that pushed up core inflation in the recent past -- in
particular, energy prices -- "appear likely to be more neutral in the
coming year, and inflation expectations remain contained." DJ30 +90.28
NASDAQ +19.62 SP500 +12.76 NASDAQ Dec/Adv/Vol
994/1998/1.83 bln NYSE Dec/Adv/Vol
704/2602/1.44 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $62; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-28-06) Suckers bear
market rally is nothing less than a defacto fraud by the lunatic frauds on wall street to suck
the suckers in; ie., as the Dow Jones industrial
average up 14, Standard & Poor's 500 index
up 4, and the Nasdaq composite index up 6, all very commissionable on heavy volume as in
final pre-election result push for bush, which fell very short. Durable goods orders fell sharply, sentiment
down, but supposedly used home sales rose slightly (riiiiight.....who says; the
realtors/government who have been talking up this bubble market?) albeit at
sharply lower prices. DOLLAR
PLUNGES TO NEAR 15-YEAR LOW In other words, no good news to justify the
ridiculous up move by the alice-in-wonderland frauds of
wall street. Worthless dollar, triple
deficits, stock/options scandals/corruption, as some speculate that fed is
behind purchases/manipulation (through proxy)of worthless american
paper now being shunned by more rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie., trade and budget
deficits, worthless dollar, scandals, fraud, corruption , etc.. In fact,
unemployment unexpectedly rose substantially and consumer sentiment
unexpectedly but similarly realistically fell, both very negative exept in the fraudulent alice-in-wonderland
world of wall street. Indeed, the housing bubble bursting with ie., unexpected 14% decline in
starts/permits, etc., led to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this
massive and pervasive fraud which defies analysis owing to these mergers. New
talking pointing: dell numbers exceed expectations depending upon ongoing
government scrutiny of their accounting practices.....riiiiight!
More contrived manipulated markets and data well as that previous unexpected
rise in that global hub of manufacturing activity, New York (worthless paper is
their real product, etc.) …..riiiiight!….. underpins fraudulent up move. Reassuring Fed speak, also
known as b**l s**t, along with IPO’s (get the suckers
in at the highs as in late 90’s market bubble), and shrugging off pervasive
stock/options fraud as at, ie., KB Homes, etc., leave
stocks ridiculously higher. Nations leaving the worthless dollar in droves for
currencies backed by value and for precious metals. Based on the self-interested
statement of typical fraud american and fed rep, we
hear once again the wishful thought that housing has bottomed.....right! [Reality/Truth:
US housing slump deepens,
spreads]. Home depot rallies despite lower than expected results and lower
guidance for the year.....right! Who is stupid enough to believe anything the
fraudulent criminal americans say. They are printing
worthless dollars like mad. Consumer sentiment actually previously fell and
there was nothing but wall street lunacy to prop the
fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The
know-nothing pundits are now saying the up move without any rational basis is
predicated upon the the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a
tax on stock trades to come directly from the traders' (traitors/frauds) bottom
lines and provide a disincentive for the churn-and-earn fraud which is
tantamount to a wasteful tax on the economy. Even token Christian paulison from jew fraud wall
street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross
the board as the wall street frauds show record profits financed, albeit
indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur
the picture to provide cover for up move talking points in defiance of reality. Stagflation
and full employment revisions pre-election.....riiiiight. Productivity comes in at a less than expected 0
(inflationary). The only surprise should have been that the number wasn't
negative. The pundits are now saying that the market/wall street fraud is in a
state of denial regarding economic fundamentals and that the market is
substantially overbought, overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah. Pre-election
core inflation rate report good …..riiiiight…..but
savings rate still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet lunatics/frauds and reality is no
problem. Despite pre-election deficit spending, GNP comes in a less than
expected paltry 1.6% increase with worthless falling dollar the catch-22
precluding reality avoidance and the worst yet to come. More nations leaving
the worthless dollar as reserve currency even as frauds on wall street reach
new highs (What are they smoking? Coking? or like the
dollar just cracking) based on corporate welfare flows with money the nation
doesn't have pre-election (record deficits). Housing prices continue their
sharp decline as bubble deflates. GM only lost 115 million. Ford lost 5.8
billion and must restate earnings back to year 2000 is a bullish sign in the
fraudulent alice-in-wonderland lunatic world of wall street. Typical pre-fed meeting rally
to provide a cushion for any negative pronouncements which reality would
require but are seldom forthcoming by the accommodative frauds who have
similarly embraced unreality. Indeed, the gutless wimps of wall street think they're "tough" when they
fraudulently take the market higher despite a clearly contrary fact based
reality. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with sell off, ignoring
pervasive options scandal/fraud and rallies Merck despite lower than
expectation results.....riiiiight! Election year corporate
welfare to prime the pump and the mock stock market with money the nation
doesn’t have (increasing already huge deficits). CPI figures (upon which
government inflation adjusted payment obligations are based) lower than
expected…..riiiiight! Intel earnings/revenues down
sharply but according to the lunatic frauds on wall street, beat expectations
and stock rallies along with yahoo which as in the pre-dot com bust days says
better days are a coming….. riiiiight Core inflation
rate which is closely watched by the Fed exceeds all expectations. Fraud
Merrill Lynch has really been pushing and commissioning that worthless paper and
reports record earnings, despite having produced nothing and for very little if
any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the monthly trade
deficit which was expected to narrow but in fact INCREASED to 69.9 billion. The
alice-in-wonderland lunatic wall
street frauds rallied on the news as the dollar precipitously fell. The
Fed Chairman said there is a "substantial correction" in housing,
which will probably shave about 1% off growth in the second half of the year.
The Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer
Confidence Higher Than Expected... riiiiight!..... and housing starts were
down sharply but not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of
style because they really are! Fed did nothing and stocks rallied,
pre-election.....riiiiight! What about the reality of
u.s. debt service at a record unsustainable $2
billion per day on a revolving $2 trillion charge account with ie., China, etc.. The fact that foreclosures are up and that
there is projected new trade deficit record, fake government inflation numbers
for election year purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall street and the
so-called pundits including yahoo below. Almost all computerized volume is and
must be considered heavy, manipulated, economically wasteful volume [stocks
move contrary to rational analytical facts (ie.,
exceeded lowered expectations, things so bad interest rates can’t rise,
exceeded expectations, no earnings but outlook extraordinary, the fed says booo as they print more worthless dollars to finance
deficits, etc. ) is money in the bank for the frauds
on wall street when they unwind said irrational positions ]. Philadelphia
Federal Reserve announces that its broadest measure of manufacturing activity
fell to a negative reading for the first time since April 2003, leading
economic indicators fall .2%, and previously fell
.1% though expected to show an increase, and in addition to the larger than
expected 4.1% drop in July existing home sales to its lowest level in over two
years and lifted inventories to record levels , new home sales fell 4.3%, and a
larger than expected 2.4% decline in July durable orders which are negatives anywhere but in the alice-in-wonderland
lunatic world of wall street where same is greeted as
good news as also follows with b**l s**t from Yahoo (which didn’t even
reference the record unanticipated trade gap):
San
Diego to Ban Wal-Mart Supercenters AP
AWB
Expresses Regret at Iraq Kickbacks AP
EU
to Decide Carbon Emissions Trade Plan AP
Bernanke:
Interest Rate Cuts Unlikely AP
After selling off in noticeable fashion yesterday,
stocks garnered just enough bargain-hunting interest and leadership from some
key sectors to finish on an upbeat note amid a mixed batch of economic data,
hawkish Fed speak and rising oil prices.With nothing of note on the earnings
calendar and a lack of evidence to justify follow-through selling interest on
the heels of Monday's drubbing, the market on Tuesday turned to economic
releases and afternoon commentary from Fed Chairman Bernanke to set a more
definitive tone for trading.Before the bell, the Commerce Dept. showed that
demand for U.S.-made durable goods fell a larger than expected 8.3% in October,
marking the biggest decline in more than six years. Core capital goods, which
provide a clearer read on underlying business capital investment, fell for the
first time in six months. Since business investment has been strong for several
years, providing significant support to GDP growth, evidence of an easing
reinforced the possibility that real GDP forecasts for Q4 and early 2007 may
have to be revised to below 2%. That, in turn, prompted even more consolidation
in the economically-sensitive Industrials sector. Nonetheless, with Fed
officials noting at their last meeting that "housing activity is likely to
remain a substantial drag on economic growth over the next few quarters,"
a report showing that sales of existing U.S. homes rose for the first time
since February offered some relief as it plays into the soft landing scenario.
In fact, with Bernanke saying today that "the effects of the housing
correction on real economic activity are likely to persist into next
year," the surprising 0.5% increase in existing home sales to a 6.24 mln
annual rate suggests that the market may indeed be bottoming now that mortgage
rates have leveled off.Of the eight sectors closing in positive territory,
Energy provided the bulk of market support. Its 1.9% advance in sympathy with a
1.1% rise in oil prices toward $61/bbl left investors more focused on the
sector's history of generating strong profit growth for the S&P 500
than the adverse impact higher oil prices can have on consumer sentiment. That
was especially important given the festering concerns about a soft
holiday shopping season and after investors also got wind earlier of an
unexpected decline in consumer confidence.Technology also provided some notable
upside leadership. The sector got its biggest boost as a sense that yesterday's
3.9% sell-off in Cisco Systems (CSCO 27.03 +1.23), a suggested holding in the
Briefing.com Active Portfolio, was overdone prompted a rebound to the tune of
4.8%. Apple Computer (AAPL 91.81 +2.27) surging 2.5%, after UBS raised its
price target on the stock to $108 from $95, was another source of sector
support. DJ30 +14.74 NASDAQ +6.69 SP500 +4.82 NASDAQ Dec/Adv/V1478/1611/1.98bln
NYSE Dec/Adv/Vol1160/2128/1.50 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $61; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-27-06) Stocks drop
still only modestly relative to reality with suckers bear market rally still
intact as the wall street fraud continues to suck the suckers in; ie., as the Dow Jones industrial average fell 158.46, S&P fell
19.05 ,and NASDAQ fell 54.34 , all very commissionable on heavy volume,
as in final pre-election result push for bush, which fell very short. Worthless
dollar, triple deficits, stock/options scandals/corruption, as some speculate
that fed is behind purchases/manipulation of worthless american paper
now being shunned by more rational market players abroad. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e
ratios were so irrationally high for this point in a bull cycle in this
indisputable secular bear market, particularly with the existing unprecedented
structural economic problems, ie.,
trade and budget deficits, worthless dollar, scandals, fraud, corruption ,
etc.. In fact, unemployment unexpectedly rose substantially and consumer
sentiment unexpectedly but similarly realistically fell, both very negative exept in the fraudulent
Online
Shopping Season Begins With Deals
AP - After jamming malls on Friday for discounted flat-screen TVs and toys,
shoppers clicked onto their computers at work Monday as retailers ushered in
the start of the online shopping season with bargains and marketing hype.
Wall
Street Has Worst Day in 4 Months AP
Ford
to Get About $18B in Financing Help AP
Alaska
to Cut Point Thompson Oil Leases AP
Wal-Mart to Open Its Own Bank in Mexico AP
Bulls have had their
share of good days since mid-July. Today wasn't one of them. The
major indices sold off in noticeable fashion, pressured by a lack of upside
leadership and a prevailing sense that the market is overdue for a correction.The popular reasons cited for the poor
showing included concerns about the dollar's weakness and a disappointing
same-store sales update from Wal-Mart (WMT 46.61, -1.29). Both reasons,
frankly, were overplayed as catalysts for the reversal of fortune. Briefing.com's belief in that respect is owed to the
understanding that a weaker dollar is good for multinational profit growth
while Wal-Mart is known to have company-specific problems. If the dollar
concerns were as pronounced as they were made out to be the Treasury market
would have been hit hard as well. That wasn't the case as the 10-year
note recouped early losses and traded up five ticks to bring its yield down to
4.53%. Meanwhile, Wal-Mart's report that November same-store sales are
now estimated to decline approximately 0.1% versus a prior estimate for sales
to be flat contradicted communications from industry sources, such as the National
Retail Federation and ShopperTrak, that suggested the
holiday selling season got off to a solid start for retailers in general.The most practical explanation for the weakness
today is that it was overdue considering the market has run virtually unabated
from its low in mid-July. It can't go up in a straight line forever. With so
much emphasis being placed on the positives lately, and some market indicators
like the Volatility Index ("VIX") flashing signs of complacency,
it was not unusual to see the market latch on to some incrementally
negative news (eg., dollar weakness) as an excuse to
take profits.Separately, the S&P's failure
to hold above the 1400 level and a forecast from Goldman Sachs that put
the S&P 500 only 4.0% higher from Friday's close by September 2007 were
added sparks for the profit-taking move. The selling activity was
broad-based, and fittingly, was concentrated among the market's
better-performing areas of late. To that end, the Technology sector
(-2.50%) was the loss leader; but it had ample company with the Financial
sector (-1.60%), Materials sector (-1.50%) and Consumer Discretionary sector
(-1.40%) trailing in its wake.The Energy sector
(-0.30%) was a pocket of relative strength, garnering support from talk of a
potential OPEC production cut in December and a forecast for cooler
temperatures to arrive soon that lifted crude futures back above $60 per
barrel. In a reflection of the broad-based nature of today's retreat, all
ten economic sectors posted a loss and only four S&P industry groups
managed a gain, the largest of which was posted by the gold group (+0.20%)
whose strength stemmed from inflationary concerns brought on by the weaker
dollar and the understanding that a weaker dollar makes the yellow metal more
affordable for foreign buyers.DJ30 -158.38 NASDAQ -54.34 NQ100 -2.20%% R2K
-2.60%% SP400 -2.00%% SP500 -19.00 NASDAQ Dec/Adv/Vol
2440/585/1.87 bln NYSE Dec/Adv/Vol
2697/624/1.46 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $60; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-24-06) Stocks drop still only
modestly relative to reality with suckers bear market rally still intact in shortened session
as the wall street fraud continues to suck the suckers in; ie., as
the Dow Jones industrial average fell 46, S&P fell 5 ,and NASDAQ fell 5 , all very
commissionable on heavy volume, as in final pre-election result push for bush, which fell very
short. MARKETS
ROCKED BY LONG OVERDUE BUT STILL MODEST RELATIVE TO REALITY SHARP SLIDE IN
DOLLAR...There has never been a time since 1929 when stock prices and p/e ratios
were so irrationally high for this point in a bull cycle in this indisputable
secular bear market, particularly with the existing unprecedented structural
economic problems, ie.,
trade and budget deficits, worthless dollar, scandals, fraud, corruption ,
etc.. In fact, unemployment unexpectedly rose substantially and consumer
sentiment unexpectedly but similarly realistically fell, both very negative exept in the fraudulent
Stocks
Drop As Dollar Declines AP
USDA
OKs Genetically Engineered Rice AP
Microsoft
Hoping for Business Upgrades AP
Wal-Mart's
Site Stalls on Black Friday AP
It was a very quiet day in the stock market.
The indices all opened significantly lower. The dollar dropped sharply in
European trading. That knocked European stocks lower and produced a
negative tone for the US open. There were no economic releases
or earnings reports, and virtually no corporate news. The markets began
to claw their way back through the day, reflecting the resilience that has been
apparent in recent weeks. The S&P and Nasdaq went briefly positive,
but then got knocked back on talk of another round of OPEC oil production cuts
in December. That pushed oil back above $60 a barrel and stock indices
retreated to post modest losses on the day. There was also a quick bout
of selling at the close, a relatively uncommon event in recent sessions. Volume
was understandably light today, but there was not much associated
volatility. There were few stocks that were caught up in day trading
pushes, and the most active lists ended with few surprised or big movers.Gold
stocks were the biggest gainers today, benefitting from the weak dollar.
Commodities in general fared well. Amongst the S&P sectors, utilities were
up 0.14% and materials 0.07%. Those were the only two up sectors.
Retail stocks were weak, perhaps on concerns that it will be a mixed season for
holiday shopping. Early reports today focused on discounting from major
retailers. Wal-Mart (47.90 -0.13 ) and Target (57.35 -1.07 )
ended the day lower. Among the S&P sectors, healthcare at -0.48% was
weakest, followed by consumer discretionary at -0.43% due to the
retailers. Energy, although oil stocks were up early, ended with a
decline of 0.28%. The consumer staples sector ended -0.29%, information
technology -0.22%, financials -0.26%, industrials -0.31%, and
telecommunications -0.01%. There were few major market movers in the
sectors. DJ30 -46.78 NASDAQ -5.72 R2K -0.08%% SOX -0.39%% SP500 -5.14
NASDAQ Dec/Adv/Vol 658.8/1278/658.7 NYSE Dec/Adv/Vol 1312/1753/831.1
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-22-06) Suckers bear
market rally into the close is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 5, Standard & Poor's 500 index
up 3, and the Nasdaq
composite index up 11, all very commissionable
on heavy volume as in final pre-election result push for bush, which fell very
short. There has never been a time since 1929 when stock prices and p/e ratios
were so irrationally high for this point in a bull cycle in this indisputable
secular bear market, particularly with the existing unprecedented structural
economic problems, ie.,
trade and budget deficits, worthless dollar, scandals, fraud, corruption ,
etc.. In fact, unemployment unexpectedly rose substantially and consumer
sentiment unexpectedly but similarly realistically fell, both very negative exept in the fraudulent
Kerkorian to Sell 14 Million GM Shares
AP - Billionaire investor Kirk Kerkorian may have
decided that casinos are a better bet than cars. The dissident General Motors
Corp. shareholder said Wednesday that he will slash his stake in the troubled
automaker by selling 14 million shares for about $462 million.
Stocks
Little Changed After Dell Earns AP
Disney
Says E! Sale Worth $800 Million AP
Judge:
No Federal Class in Vioxx Suits AP
Unemployment
Claims Rising Faster AP
As expected, trading action in the
market appeared as if the tryptophan-induced comas
that typically accompany the consumption of Thanksgiving Day turkey came a day
early as trading among the majority of large-cap names looked a bit sedated.The Dow fluctuated around the flat line, as
investors weighed another restructuring at Alcoa (AA 30.43 +1.24) against
confirmation that Kirk Kerkorian's Tracinda Corp sold 14 mln shares
of General Motors (GM 31.09 -1.52) this week. The underlying bullish tone
responsible for lifting blue chips nearly 10% over the last four months
resurfaced late in the day, however, to sideline the bears just enough to
inch the Dow into the green.The S&P 500 was also
a bit sluggish all day, having posting gains in 10 out of the last 12 sessions.
The S&P 500 traded essentially in a two-point range all day, but a
late-day turnaround in the influential Financials sector helped the broader
market to more than merely ride the coattails of a 9% surge in shares of Dell
(DELL 27.13 +2.31) into another winning session.Last
night, Dell topped Wall Street estimates, garnering multiple analyst upgrades
and price target increases and helping the Nasdaq
continue its outperformance. Since the tech
bellwether was a source of concern for investors after delaying its report last
week, its Q3 surprise provided some additional comfort since growth concerns
within the sector had left some questioning the sustainability of tech
valuations. Some upbeat analyst commentary boosting shares of Yahoo! (YHOO
28.53 +1.39) 5.1% and renewed enthusiasm in chip stocks gave the Technology
sector an additional boost.With AAA expecting 38.3 mln Americans to travel 50 miles or more over the
Thanksgiving holiday, and millions more expected to preserve Black Friday's
reputation as one of the busiest retail shopping days of the year, falling oil
prices were another focal point Wednesday. Crude for January delivery fell 1.5%
to $59.27/bbl after the EIA reported a large increase in weekly crude supplies
and a surprise build in gasoline inventories.Fortunately
for investors initially struggling to look past an unexpected decline in
consumer sentiment, oil's decline eventually helped participants look past the
absence of leadership from one of the biggest contributors to earnings growth
on the S&P 500 over the last several quarters -- Energy. DJ30 +5.36 NASDAQ
+11.14 SP500 +3.28 NAS DAQ Dec/Adv/Vol 1502/1502/1.58
bln NYSE Dec/Adv/Vol
1262/1987/1.28 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/ and the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-21-06) Suckers bear
market rally is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 5, Standard & Poor's
500 index up 2, and the Nasdaq
composite index up 2, all very commissionable
on heavy volume as in final pre-election result push for bush, which fell very
short. There has never been a time since 1929 when stock prices and p/e ratios
were so irrationally high for this point in a bull cycle in this indisputable
secular bear market, particularly with the existing unprecedented structural
economic problems, ie., trade and budget deficits,
worthless dollar, scandals, fraud, corruption , etc.. Indeed, the housing
bubble busting with ie., unexpected 14% decline in
starts, etc., leads to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this massive
and pervasive fraud which defies analysis owing to these mergers. New talking pointing: dell numbers exceed expectations depending upon ongoing government scrutiny of their accounting practices.....riiiiight! More
contrived manipulated markets and data well as that previous unexpected rise in
that global hub of manufacturing activity,
If your life was in need of some excitement ahead of
a long holiday weekend, Wall Street wasn't the place to look today. The major
averages traded in very narrow ranges throughout the session, making modest
moves on either side of the unchanged mark as investors lack notable catalysts
to more aggressively keep buying efforts intact.For a second straight day there
was nothing on the economic calendar to either support or to counter the
possibility of a soft landing scenario, leaving investors to weigh a batch of
generally good earnings news against a rebound in oil prices. Crude for January
delivery closed above $60/bbl, surging 2.3% amid reports that restrictions
imposed on the Trans-Alaska Pipeline System due to high winds will cut capacity
by 25%.Fortunately for the bulls, strong leadership from the profit engine that
is Energy helped to offset some of the commodity's potential inflationary
characteristics. To wit, Energy surged 1.8%, by far and away leading the charge
among the five other S&P 500 sectors trading higher but only averaging a
gain of just 0.2%.Of the five sectors attracting buyers, Industrials provided
the most influential leadership. Boeing (BA 90.08 +0.96) soared to a new
all-time high after inking an order from Korean Air worth $5.5 bln at list
prices. The sector's best performer, though, was Deere & Co. (DE 95.04
+5.63). Despite warning that fiscal 2007 sales are expected to get off to a
slow start, Q4 profits handily topping analysts' expectations helped propel the
stock more than 6.0% to a record high.Medtronic (MDT 53.67 +4.72) was another
surprise, climbing nearly 10% after key market share gains contributed
to a better than expected Q2 earnings report. However, consolidation throughout
the drug and biotech groups offset strength in the medical equipment space and
prevented Health Care from offering any leadership to the upside.Also keeping
market gains in check was the absence of leadership from Financials, Consumer
Staples and Technology. While the latter eventually inched into the green, as
Google (GOOG 509.65 +14.60) eclipsing the $500 level for the first time ever
helped offset analyst downgrades in the semiconductor space (e.g. LRCX -2.5%,
NVLS -2.5%), the others were unable to recover much ground. BTK -0.9% DJ30
+5.05 DJTA +0.3% DJUA +0.2% DOT +0.4% NASDAQ +2.12 NQ100 +0.3% R2K +0.2% SOX
-1.1% SP400 +0.2% SP500 +2.31 XOI +1.7% NASDAQ Dec/Adv/Vol 1503/1516/1.69 bln
NYSE Dec/Adv/Vol 1262/2022/1.48 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-20-06) Suckers bear
market rally into the close to end mixed is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average down 26.02, Standard & Poor's
500 index down 1, and the Nasdaq
composite index up 6, all very commissionable
on heavy volume as in final pre-election result push for bush, which fell very
short. There has never been a time since 1929 when stock prices and p/e ratios
were so irrationally high for this point in a bull cycle in this indisputable
secular bear market, particularly with the existing unprecedented structural
economic problems, ie., trade and budget deficits,
worthless dollar, scandals, fraud, corruption , etc.. Indeed, the housing
bubble busting with ie., unexpected 14% decline in
starts, etc., leads to rally in the fraudulent alice-in-wonderland
world of wall street. Obfuscating mergers help preclude detection of this massive
and pervasive fraud which defies analysis owing to these mergers. More
contrived manipulated markets and data well as that previous unexpected rise in
that global hub of manufacturing activity,
Dow
Closes Down 26, Nasdaq
Finishes Up 7
AP - Wall Street was mixed in an erratic session Monday after a flurry of
merger news failed to erase investors' concerns that a recent run-up has left
stocks overbought.
Nasdaq Shrugs Off Rejection From
LSE AP
Home
Sales Plummet in 38 States in 3Q AP
Yahoo,
Papers Sign Internet Revenue Deal AP
Acquisitions
Made in 2006 Set New Record AP
Stocks looked tired as investors
kicked off a holiday-shortened week weighing concerns about overbought market
conditions against a wave of M&A activity.After
closing in record territory 18 times since the beginning of October, a sense
the Dow was due for some consolidation after being up every day last week
eventually took hold. The Nasdaq, in contrast, built
on last week's impressive 2.3% surge; but decliners outpacing advancers
throughout the afternoon lent even less conviction behind its modest 0.3% advance.With nothing of note on the economic calendar to
either support or to counter the possibility of a soft landing
scenario, the market's attention turned to a spate of new deals totaling more
than $50 bln. Among the day's biggest deals giving
investors an added vote of confidence was Freeport-McMoRan's (FCX 55.63 -1.77)
$26 bln bid for Phelps Dodge (PD 120.47 +25.45),
which marked the day's largest deal.That
proposed transaction, coupled with Evraz Group's $2.3
bln bid for Oregon Steel Mills (OS 63.77 +4.81),
renewed speculation about other potential takeover targets throughout the
Materials sector, which was by far and away today's best performing sector.
However, as the least influential of the 10 sectors on the S&P 500 and one
of only three sectors closing in positive territory, the lack of widespread
leadership left the window open for some profit taking.Of
the other two sectors closing higher, Financials was in focus following The
Blackstone Group's $20 bln bid for Equity Office
Properties Trust (EOP 48.15 +3.43). As the largest private equity deal in
history, including debt ($36 bln), investors began
buying any and every REIT they could get their hands on. To wit, six of the day's top seven S&P industry groups were tied to REITs. Other deals in the sector garnering attention were
Bank of America's (BAC 54.90 +0.05) $3.3 bln bid for
Charles Schwab's (SCHW 18.94 +0.38) U.S. Trust division and the NASDAQ Stock
Market (NDAQ 37.71 +1.14) announcing its intention to acquire the more than 70%
of the London Stock Exchange it doesn't already own for $5.1 bln.Technology was the only other sector to finish in the
green. Aside from continued momentum across the semiconductor group, Microsoft
(MSFT 29.89 +0.49) surging 1.7% to a fresh 52-week high after it was upgraded
at Credit Suisse was the biggest reason behind the tech-heavy Nasdaq's ability to hold onto a
small gain. BTK -0.8% DJ30 -26.02 DJTA -0.2% DJUA -0.4% DOT -0.2% NASDAQ +6.86
NQ100 +0.2% R2K +0.3% SOX +1.8% SP400 +0.2% SP500 -0.70 XOI -0.6% NASDAQ Dec/Adv/Vol 1525/1516/1.71 bln NYSE
Dec/Adv/Vol 1641/1620/1.44 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $55; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-17-06)
Suckers bear market rally is nothing less
than a defacto fraud by the lunatic frauds on wall street to
suck the suckers in; ie.,
as the Dow Jones industrial average up 36, Standard & Poor's 500 index up 1, and the Nasdaq composite index down 3, all very
commissionable on heavy volume as in final pre-election result push for bush,
which fell very short. There has never been a time since 1929 when stock prices and p/e ratios were so irrationally high for this point in a bull cycle in this indisputable secular bear market, particularly with the existing unprecedented structural economic problems, ie., trade and budget deficits, worthless dollar, scandals, fraud, corruption , etc.. Indeed, the housing bubble busting with ie., unexpected 14% decline in starts, etc., leads to rally in the fraudulent alice-in-wonderland world of wall street. More contrived manipulated markets and data well as that previous unexpected rise in that global hub of manufacturing
activity,
The major averages finished mixed Friday as
uncertainty about the pace of economic growth acted as an overhang on stocks
throughout the session. The Dow garnered just enough of a gain to close at a
new record high while the S&P 500 inched above the flat line into the
finish, leaving the Nasdaq eyeing next week to possibly begin a new winning
streak.With Fed officials noting in Wednesday's release of the FOMC minutes
that housing activity was likely to remain a substantial drag on economic
growth over the next few quarters, investors keyed in on the latest economic
data to see just how much of a problem housing really is and what sort of
impact continued weakness will have on consumption patterns (if any) heading
into the all-important holiday shopping season. Before the bell the Commerce
Dept. showed that Housing Starts plunged a larger than expected 14.6% in
October to 1.49 mln units. That is a six year low and the lowest
level since July 2000. Building Permits fell 6.3% to an annual rate of
1.54 mln units, the lowest level since December 1997.Since declines in the data
were anticipated following such a surprising increase in September starts, and
there is still no sign that an ongoing slowdown in the housing sector is
causing significant weakness in consumer spending, an ensuing rally in
Treasuries that sent bond yields tumbling across the curve served as
a reminder that things probably aren't all that bad.After all, declines in
housing activity are a necessary consequence of the soft landing the Fed is
trying to successfully engineer. As a result, further proof that rising
interest rates have taken some steam out of the economy renewed enthusiasm for
bonds after yesterday's pullback and eventually helped the underlying bullish
tone responsible for four straight months of gains to resurface.Unfortunately
for the bulls, the only rate-sensitive sector providing leadership to the
upside was Utilities, which is also among the least influential of the 10
S&P 500 sectors. Nonetheless, weakness in Financials was minimal while
leadership in areas like Energy, Health Care and Consumer Staples was enough to
keep buyers interested in blue chips.Technology closed modestly lower, but was
the biggest obstacle for the bulls to overcome. To wit, Intel (INTC 22.10
-0.23) was among the biggest disappointments on the Dow as a weak sales
forecast from Marvell Technology Group (MRVL 19.05 -0.57) brought the valuation
of other chip makers into question.Hewlett-Packard (HPQ 39.74 -0.39) was the
other notable laggard on the Dow. While HP supported our Overweight rating on
the tech sector, having nearly quadrupled Q4 profits and issuing upside
guidance, reports that the SEC has elevated its informal probe to a formal
investigation provided an excuse to consolidate some of the stock's impressive
40% year-to-date advance.The absence of leadership was also witnessed in
Consumer Discretionary. The sector's biggest nemesis was Starbucks (SBUX 37.42
-2.01), which tumbled 5.0% after it failed to live up to Wall Street's high
expectation by merely matching analysts' forecasts last night and posting its
first profit decline since 2001. DJ30 +36.74 NASDAQ -3.20 SP500 +1.44 NASDAQ
Dec/Adv/Vol 1743/1280/1.77 bln NYSE Dec/Adv/Vol 1736/1509/1.65 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $55; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-16-06) Waning full
Moon and lunatic suckers bear market rally is nothing less
than a defacto fraud by the lunatic frauds on wall street to
suck the suckers in; ie.,
as the Dow Jones industrial average up 54, Standard & Poor's 500 index up 3, and the Nasdaq composite index up 6, all very
commissionable on heavy volume as in final pre-election result push for bush,
which fell very short. More contrived manipulated markets and data well as that previous unexpected rise in that global hub of manufacturing
activity,
The major averages extended their winning streak to
five as investors rallied around encouraging economic data, most notably a
benign read on consumer inflation, and oil prices plunging to their lowest
level of the year. The Dow topped the 12,300 level for the first time ever and
closed at another record high.Before the bell, the Labor Dept. reported that
core CPI rose just 0.1%, the slowest pace in eight months, lending further
evidence the economy is on pace for a soft landing. Economists were expecting a
fourth straight rise of 0.2%. Even though the year-over-year core rate is 2.7%,
which is still higher than the Fed would like, the data confirm that the recent
uptrend is moderating. The improved inflation outlook checks in a day after it
became known that nearly every Fed official views the current rates of core
inflation as uncomfortably high. In fact, such concerns were echoed by Chicago
Fed President Moskow and St. Louis Fed President William Poole earlier in the
session, which contributed to the midday reversal in Treasuries. Moskow said
that, although inflation "is moving in the right direction," it is
"premature" to declare an end to the inflation threat. Poole said the
Fed is not being "cavalier" regarding the inverted curve and that,
while inflation may be dissipating, they are "not out of the woods
yet."Be that as it may, the rate-sensitive Financials sector's ability to
look beyond the havoc an inverted yield curve can have on net interest margins
was also reassuring. The spread between the 2-year and 10-year notes slipped deeper
into inversion as the hawkish Fed speak and a rebound on Philly Fed offset the
tame read on core CPI, at least in the bond pits. The Financials sector instead
found support from the brokers, which were in focus as two potential
blockbusters (e.g. KBR and HTZ) went public. The AMEX Securities Broker/Dealer
Index hit an all-time high as did one of its most influential components,
Goldman Sachs (GS 196.70 +3.59).Given the market's preoccupation with the pace
of economic growth, a rebound in the Philly Fed index lent some confirmation to
yesterday's unexpected rise in the NY Empire State Index, serving as a reminder
that manufacturing activity is holding up well. That provided an additional
layer of support for the Industrials sector, which was among the eight sectors
posting respectable gains.Among the other seven sectors trading higher,
Consumer Discretionary turned in the best performance. The sector was initially
in focus after Clear Channel Communications (CCU 35.33 +1.21) agreed to be
taken private for $19 bln but got an extra vote of consumer confidence as the
bottom fell out of the price of oil late in the day.Crude for December delivery
began its initial descent following the first build in natural gas inventories
in three weeks. However, with the December contract expiring tomorrow and some
conflicting reports about oil tanker traffic exacerbating uncertainty about
OPEC members living up to their production cut agreements, crude futures
tumbled. Oil's 4.3% decline was its biggest one-day decline since August 2005,
closing at $56.26/bbl and taking a toll on the Energy sector.With Dell (DELL
25.10 -0.65) delaying the release of its Q3 report and a Q1 profit warning from
Applied Materials (AMAT 17.98 -0.67), the lack of leadership within the
influential tech sector left the Nasdaq relatively flat and kept market
gains at a minimum midday. However, continued enthusiasm for other bellwethers
like Microsoft (MSFT 29.47 +0.35), which hit a fresh two-year high, and Cisco
Systems (CSCO 27.15 +0.55), which increased its share buyback program by $7
bln, eventually carried enough weight to keep the sector in positive territory.
BTK +0.9% DJ30 +54.11 DJTA +1.1% DJUA +0.3% DOT +0.8% NASDAQ +6.31 NQ100 +0.5%
R2K -0.2% SOX +0.4% SP500 +3.19 XOI -2.5% NASDAQ Dec/Adv/Vol 1514/1526/2.07 bln
NYSE Dec/Adv/Vol 1535/1734/1.60 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $56; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-15-06) Waning full
Moon and lunatic suckers bear market is nothing less
than a defacto fraud by the lunatic frauds on wall street to
suck the suckers in; ie.,
as the Dow Jones industrial average up 33, Standard & Poor's 500 index up 3, and the Nasdaq composite index up 12, all very
commissionable on heavy volume as in final pre-election result push for bush,
which fell very short. Unexpected rise in that global hub of manufacturing
activity,
US
Airways Makes Hostile Offer for Delta
AP - US Airways made a hostile $8 billion bid for Delta Air Lines on
Wednesday, ignoring Delta's repeated statements that it isn't interested in a
merger. The move could start a stampede of competing bids in a long-predicted
industry consolidation.
Dow
Finishes at New High on Fed Minutes AP
Dell
Says SEC Has Started Formal Probe AP
NBC
Exec Named New Chairman, CEO of AOL AP
Dunn
Pleads Not Guilty in HP Spy Scandal AP
The underlying bullish trend was
again the market's friend Wednesday as investors rallied around more data
suggesting the much-desired soft landing remains on track and a resurgence
in merger activity. For a second straight day, the Dow and Russell 2000 closed
at new all-time highs.Given the market's
preoccupation with the pace of economic growth, an unexpected rise in the NY
Empire State Index served as a reminder that the manufacturing sector is still
holding up reasonably well. That stronger than expected early read on November
manufacturing conditions, coupled with US Airways' (LCC 59.50 +8.57) proposed
$8 bln merger with Delta Air Lines, and Boeing
(BA 87.06 +1.32) reportedly poised to receive more than $10 bln
worth of additional business, provided a floor of support for the Industrials sector.In fact, the possibility of more M&A deals
waiting in the wings for air carriers helped the majority of airline stocks,
which are typically sensitive to oil prices, completely look past a rebound in
energy prices. The AMEX Airlines Index surged 5.2% to a new 52-week high.After logging its biggest three-day decline since
mid-September, crude for December delivery closed up 0.8% at $58.76/bbl
following larger than expected declines in weekly distillate and gasoline
supplies. Fortunately for the bulls, the Energy sector took full advantage and
provided enough notable leadership as today's best performing sector to help
offset the commodity's waning inflationary influence.To
wit, the minutes from the October 24-25 FOMC meeting noted that, "with
energy prices well off the highs reached earlier in the year, members felt that
it was no longer appropriate to note that the high level of energy prices had
the potential to sustain inflation pressures." Perhaps most noteworthy
with regard to this afternoon's report was the fact that it brought few
surprises. In particular, there was no mention about concern that a
recession might be developing.Sure, "all members
agreed that the risks to achieving the anticipated reduction in inflation
remained of greatest concern." Also, nearly all participants viewed the
current rates of core inflation as "uncomfortably high," which
contributed to some late-day choppiness since tomorrow morning brings the
all-important October core-CPI number (8:30 ET). Nonetheless, Fed officials
also noting that the "upside risks to inflation had declined" and
showing that many participants "drew some comfort" from the fact
that the housing market problems "did not seem to be spilling over into
consumer spending," and that "investment spending also appeared to be
holding up well" kept buyers in control of the action into the
close. Preventing an even stronger rally, though, was a lack of leadership
from the rate-sensitive Financials sector. While today's M&A plays into our
favorable outlook on the investment banks, the spread between the 2-year and
10-year notes slipping deeper into inversion weighed on the banks. Treasuries
sold off after a stronger than expected read on manufacturing conditions
diminished hopes the economy is slowing enough to justify a possible interest
rate cut anytime soon.BTK +0.9% DJ30 +33.70 DJTA
+1.4% DJUA -0.4% DOT +0.6% NASDAQ +12.09 NQ100 +0.4% R2K +0.9% SOX +0.4% SP400
+0.6% SP500 +3.35 XOI +0.5% NASDAQDec/Adv/Vol
1191/1862/2.15bln NYSE Dec/Adv/V1240/2018/1.62 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $58; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-14-06) Suckers bear market is nothing less
than a defacto fraud by the lunatic frauds on wall street to
suck the suckers in; ie.,
as the Dow Jones industrial average up 86, Standard & Poor's 500 index up 8, and the Nasdaq composite index up 24, all very
commissionable on heavy volume as in final pre-election result push for bush,
which fell very short. Nations leaving the worthless dollar in droves for currencies backed by value and for precious metals. Based on the self-interested statement of typical fraud american and fed rep, we hear once again the wishful thought that housing has bottomed.....right! [Reality/Truth: US
housing slump deepens, spreads]. Home depot rallies despite lower than expected results and lower guidance for the year.....right! Who is stupid enough to believe anything the fraudulent ciminal americans say. They are printing worthless dollars like mad. Reassuring Fed speak, also known as b**l s**t, along with IPO’s (get the suckers in at the highs as in
late 90’s market bubble), and shrugging off pervasive stock/options fraud as
at, ie.,
KB Homes, etc., leave stocks ridiculously higher. Consumer sentiment
actually previously fell and there was nothing but wall street lunacy to prop
the fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The know-nothing pundits are now saying
the up move without any rational basis is predicated upon the the falsity that gridlock in washington
is welcomed and good because no regulation of, ie.,
fraud on wall street, etc., can be passed. How about a tax on stock trades to
come directly from the traders' (traitors/frauds) bottom lines and provide a
disincentive for the churn-and-earn fraud which is tantamount to a wasteful tax
on the economy. Even token Christian paulison from jew fraud wall street couldn't
stem the tide against the blatent zionist/neocon/bush
co failure accross the board as the wall street
frauds show record profits financed, albeit indirectly, by huge deficits, both
trade and budget. Obfuscating mergers blur the picture to provide cover for up
move talking points in defiance of reality. Stagflation
and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah.
Pre-election core inflation rate report good …..riiiiight…..but savings rate
still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent
Comair
Flight Attendants Approve Cuts AP
Bush:
Automakers Face 'Tough Choices' AP
Wal-Mart,
Target Start Holiday Price War AP
Wholesale
Inflation Drops Record Amount AP
After middling around the flat line throughout most
of the session, a technical bounce late in the day vaulted stocks to their best
levels of the session.What was shaping up to be a rather lackluster
session amid a tug-o-war about whether or not today's economic data
suggested a soft or hard landing for the economy turned out favorably for the
bulls when the S&P 500 broke through its six-year high of 1389 around 2:45
ET. Eclipsing that technical barrier, on no specific news, prompted a surge in
buy orders for the S&P 500 futures contract, which in turn lit a fire under
stocks across the board. In fact, all three of the major indices initially
surging higher and logging roughly the same percentage gains lent further
evidence that program trading was behind the late-day rally. Of the nine
sectors trading higher, Consumer Discretionary and Technology turned in the
best performances, each surging 1.1%. As the second most influential sector,
Tech's advance provided the bulk of leadership, as evidenced by the Nasdaq outpacing
its blue chip counterparts to the upside. Intel Corp (INTC 21.86 +0.86) more
than doubled yesterday's impressive 2.0% advance amid more upbeat analyst
commentary and the early rollout of its new quad-core processors. Intel is a
suggested holding in the Briefing.com Active Portfolio.Also helping the Dow
close at a new all-time high was discretionary component Home Depot (HD 37.26
+0.86). The stock was down as much as 1.7% after it missed expectations and cut
its full-year outlook, renewing concerns about the impact a weak housing market
is having on the overall economy. That was eventually put to rest as it became
apparent that much of the bad news may have already been priced into the stock.
Also mitigating some of the housing worries was DR Horton (DHI 24.11 +1.73),
which soared 9.3% after handily topping Wall Street expectations on both the
top and bottom lines. Homebuilding was today's best performing S&P industry
group.The discretionary sector was actually in focus before the market even opened
as investors waited to get an update about the health of the consumer and
inflation. The Commerce Dept. showed that retail sales fell a less than
expected 0.2% in October. More notably, retail sales, excluding a drop in
gasoline sales - which is good for the economy - rose 0.4%.That was
consistent with a moderate upward trend in consumer spending that was also
evidenced by a batch of better than expected earnings reports from a plethora
of retailers. Wal-Mart (WMT 47.66 +1.34) beat by a penny while Target (TGT
59.16 +1.40), BJ's Wholesale (BJ 29.69 +1.08), Saks (SKS 20.40 +0.51) and
Dillard's (DDS 35.59 +6.38) also topped expectations. With policy makers
focused on inflation risks, a surprising drop in the October core-PPI that
showed inflationary pressures at the wholesale level remain contained provided
additional support. To wit, bond traders began pricing in a possible Fed
easing, pushing the yield on the 10-year note (+12/32) to a seven-month low
(4.56%). Core-PPI unexpectedly fell 0.9%, the biggest decline since August
1993, while total PPI plunged 1.6%, matching the steepest decline on record.
DJ30 +86.13 NASDAQ +24.29 SP500 +8.80 NASDAQ Dec/Adv/Vol 1017/2039/1.97 bln
NYSE Dec/Adv/Vol 883/2388/1.71 bln
U.S. HOUSING SLUMP DEEPENS, SPREADS
BARRIE MCKENNA Washington — First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too. Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse. “I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007,” said Bob Nardelli, Home Depot's chairman and chief executive officer. Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market. “The loss of jobs ... in the home construction market is at unprecedented levels,” Mr. Nardelli told analysts on a conference call Tuesday. “Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors.” Problems in the housing sector have also begun to affect how consumers spend their money. In October, U.S. retail sales fell at an annual rate of 0.2 per cent — the third consecutive monthly decline, according to a U.S. Commerce Department report Tuesday. The decline was heavily influenced by lower gasoline prices, which resulted in less revenue for gas stations. But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent. “The housing slowdown left its grimy fingerprints all over this report,” BMO Nesbitt Burns economist Douglas Porter said in a note to clients. Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October. “People are being very cautious,” said Ian Shepherdson, chief North American economist at High Frequency Economics. “The housing crunch is now hurting.” At least two other bellwether U.S. retailers — Wal-Mart Stores Inc. and Target Corp. — reported Tuesday that their sales and profit remain strong, in spite of the problems in the housing sector. But executives at Wal-Mart, the world's largest retailer, acknowledged that sales in the third quarter were disappointing and it is already vowing its biggest-ever discounting binge on items such as toys and electronics to keep cash registers ringing this Christmas. “This season, no one will doubt Wal-Mart's leadership on price and value,” Wal-Mart CEO Lee Scott said. Wal-Mart's profit rose to $2.65-billion (U.S.) or 63 cents a share in the third quarter that ended Oct. 31, up from $2.37-billion or 57 cents a year earlier. That was slightly below what analysts had expected, according to Reuters. Sales were up 12 per cent to $83.5-billion. But those figures include sales at newly opened stores and foreign stores. Sales at U.S. stores that have been open at least a year were up just 1.5 per cent, and Mr. Scott said fourth-quarter sales would rise just 1 to 2 per cent.
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $58; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-13-06) Waning full
Moon and lunatic suckers bear market is nothing less
than a defacto fraud by the lunatic frauds on wall street to
suck the suckers in; ie.,
as the Dow Jones industrial average up 23, Standard & Poor's 500 index up 3, and the Nasdaq composite index up 16, all very
commissionable on heavy volume as in final pre-election result push for bush,
which fell very short. Reassuring Fed speak, also known as b**l s**t, along with IPO’s (get the suckers in at the highs as in
late 90’s market bubble), and shrugging off pervasive stock/options fraud as
at, ie.,
KB Homes, etc., leave stocks ridiculously higher. Consumer sentiment
actually previously fell and there was nothing but wall street lunacy to prop
the fraudulent market. The republicans who lockstepped
with war criminal dumbya bush deserved to lose. The
frauds on wall street now looking for the new corporate welfare program for
which to sell the sizzle ie., stem cells, etc.. The know-nothing pundits are now saying
the up move without any rational basis is predicated upon the the falsity that gridlock in washington
is welcomed and good because no regulation of, ie.,
fraud on wall street, etc., can be passed. How about a tax on stock trades to
come directly from the traders' (traitors/frauds) bottom lines and provide a
disincentive for the churn-and-earn fraud which is tantamount to a wasteful tax
on the economy. Even token Christian paulison from jew fraud wall street couldn't
stem the tide against the blatent zionist/neocon/bush
co failure accross the board as the wall street
frauds show record profits financed, albeit indirectly, by huge deficits, both
trade and budget. Obfuscating mergers blur the picture to provide cover for up
move talking points in defiance of reality. Stagflation
and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah.
Pre-election core inflation rate report good …..riiiiight…..but savings rate
still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent
Dow
Closes Up 23, Nasdaq
Finishes Up 17
AP - Wall Street extended its November rally into a new week Monday, betting
that an upcoming series of economic reports will show strength in the overall
economy with inflation contained.
·
Oil
Prices Settle Below $59 a Barrel AP
·
Gasoline
Prices Rise 3 Cents to $2.23 AP
·
Tribune
Stock Up Amid Reports of Bidding AP
·
Tyson
Foods Posts Third Consecutive Loss AP
Stocks stumbled out of the gate
Monday, but the bears again failed to prevent the market's underlying bullish
tone from resurfacing to extend last week's solid gains. Since there were no
earnings or economic reports of note scheduled until Tuesday, investors
benefited from upbeat analyst commentary, plunging oil prices and some
reassuring Fed speak. With the S&P 500
Semiconductors Index still ranked as one of this year's biggest laggards,
Citigroup upgrading the group to Overweight helped Technology provide a floor
of support for all three of the major averages. Intel (INTC 21.00 +0.42), a suggested
holding in the Briefing.com Active Portfolio and today's best performing Dow
component, surged 2.0% after it was added to Citigroup's Recommended List.
Qualcomm (QCOM 36.21 +0.97) climbing 2.8%, after Motorola (MOT 21.13 -0.25)
said it will use Qualcomm chips in its new 3G handsets, and Dell (DELL
25.49 +0.60) surging 2.4% after Deutsche Bank raised its price target to
$28 provided additional sector support.Among the
other seven sectors trading higher, Industrials also provided some notable
leadership. Aside from oil's pullback making transportation stocks more
attractive, the Industrials sector got an additional lift after Citigroup added
General Electric (GE 35.39 +0.22) to its Recommended List Extending Friday's
2.6% sell-off, crude for December delivery fell 1.7% to $58.58/bbl amid
concerns that warm-weather forecasts for the week will curb demand for heating
fuel. More notably, though, was the Energy sector's resilience in the face of
oil's decline.With this week earmarked as the second
biggest for IPOs this year, investment banks
generated some additional buying interest and helped the rate-sensitive
Financials sector shrug off rising interest rates. Among all 12 of the
components in the AMEX Securities Broker/Dealer Index gaining ground, Lehman
Brothers (LEH 73.44 +1.38) was among the best performers, which was
understandable since it is the only underwriter involved in all three of this
week's potential blockbuster deals: Hertz Global Holdings (HTZ), Nymex Holdings (NMX), and KBR Inc. (KBR).Consumer
Discretionary was also in focus. Homebuilders recouped some of its year-to-date
losses as investors applauded the surprise resignation of KB Home's (KBH 44.72
+0.90) CEO amid an options backdating investigation. Publishers were an even
brighter spot amid reports that Gannett (GCI 59.87 +0.71) has become interested
in bidding for Tribune Co. (TRB 32.45 +0.42).Also, with investors questioning
the degree to which consumer spending will hold up during the upcoming holiday
season and whether inflation remains under control, notably hawkish Dallas Fed
President Richard Fisher saying that the U.S. economy is growing
"forcefully" offered investors an additional vote of confidence. DJ30
+23.45 DJTA +0.9% DOT +0.9% NASDAQ +16.66 NQ100 +1.0% R2K +0.4% SOX +1.5% SP400
+0.2% SP500 +3.52 NASDAQ Dec/Adv/Vol 1302/1758/1.71 bln NYSE Dec/Adv/Vol
1512/1777/1.33 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $58; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-10-06) Waning full
Moon and lunatical suckers
bear market rally into the close is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 5, Standard & Poor's 500 index up 2, and the Nasdaq composite index up 13,
all very commissionable on heavy
volume as in final pre-election result push for bush, which fell very short. Consumer sentiment actually previously fell and there was nothing but wall street lunacy to prop the fraudulent market. The
republicans who lockstepped with war criminal dumbya bush deserved to lose. The frauds on wall street now
looking for the new corporate welfare program for which to sell the sizzle ie., stem
cells, etc.. The know-nothing pundits were saying the up move without any
rational basis was predicated upon the the falsity
that gridlock in washington is welcomed and good
because no regulation of, ie., fraud on wall street,
etc., can be passed. How about a tax on stock trades to come directly from the
traders' (traitors/frauds) bottom lines and provide a disincentive for the
churn-and-earn fraud which is tantamount to a wasteful tax on the economy. Even
goldman token Christian paulison from jew fraud wall street couldn't stem the tide against
the blatent zionist/neocon/bush
co failure accross the board as the wall street
frauds show record profits financed, albeit indirectly, by huge deficits, both
trade and budget. Obfuscating mergers blur the picture to provide cover for up
move talking points in defiance of reality. Stagflation
and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah.
Pre-election core inflation rate report good …..riiiiight…..but savings rate
still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent
·
Enron's
Fastow Assigned to La. Prison AP
·
Merck
Submits New Data for Arcoxia AP
·
Russia
Moves Closer to WTO Membership AP
·
Qwest
Execs Cash in Stock Options AP
Stocks bounced back Friday following Thursday's
modest pullback, but blue chip gains were modest at best with the Nasdaq again
turning in a session of outperformance.With no scheduled economic data to
potentially rattle the market, the market refocused its attention on
earnings. Better than expected quarterly reports from two Dow components
-- Walt Disney (DIS 32.36 -1.22) and American International Group (AIG 69.76
+1.72) -- were the headliners during an otherwise quiet day of trading. In
fact, volume was below average due in part to the observance of Veterans Day
while all three of the major averages traded in a relatively narrow range
throughout the session.Last night, AIG topped Wall Street forecasts and surged
2.5% after Q3 profits more than doubled. Fortunately for the bulls, AIG's
strong quarter helped provide a floor of support for Financials, which got an
additional boost from a decline in borrowing costs.Another rate-sensitive area
benefiting from falling bond yields was Homebuilding, which as the day's best
performing S&P industry group helped the Consumer Discretionary sector
shrug off a 3.6% drubbing in shares of Disney. A suggested holding in the
Briefing.com Active Portfolio, Disney also beat analysts' expectations after
the close on Thursday. However, as this year's second best performing Dow
component (behind GM), and up 5.3% already this week in anticipation of strong
results, the stock sold off on the news and amid uncertainty about fiscal 2007
growth prospects.Retailers were another focal point Friday. The group got a
boost following a strong earnings report from Kohl's (KSS 73.71 +0.77) and a
better than feared report from recommended holding Pacific Sunwear (PSUN 18.55
+1.28). An analyst upgrade on Nordstrom (JWN 46.75 +1.21), along with falling
oil prices heading into the holiday shopping season, provided additional support
for the Discretionary sector.The 2.6% sell-off in crude oil prices did not bode
well for Energy, however, which turned in the day's worst performance. Crude
oil for December delivery closed $60/bbl after the International Energy Agency
cut its 2006 global demand forecast for a third consecutive month.Meanwhile,
after falling 4.0% over the last two sessions, Health Care rebounded to offer
some support. Technology also provided some modest leadership to the upside,
garnering just enough buying interest to push its year-to-date gain above 7%.
BTK +0.8% DJ30 +5.13 DJTA +1.2% DJUA +0.5% DOT +0.7% NASDAQ +13.71 NQ100 +0.6%
R2K +0.9% SOX +1.0% SP400 +0.7% SP500 +2.57 XOI -0.5% NASDAQ Dec/Adv/Vol
1195/1820/1.69 bln NYSE Dec/Adv/Vol 1142/2106/1.33 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-9-06)Waning full moon and Stocks drop still only modestly
relative to reality and suckers bear market rally to end lower as the wall street fraud continues to suck the
suckers in; ie., as the Dow Jones industrial average
fell 73.24,
Standard & Poor's 500 index down 7.39, and the Nasdaq composite index
down 8.93, all very commissionable on
heavy volume as in final pre-election result push for bush, which fell very short. The
republicans who lockstepped with war criminal dumbya bush deserved to lose. The frauds on wall street now
looking for the new corporate welfare program for which to sell the sizzle ie., stem
cells, etc.. The know-nothing pundits were saying the up move without any
rational basis was predicated upon the the falsity
that gridlock in washington is welcomed and good
because no regulation of, ie., fraud on wall street,
etc., can be passed. How about a tax on stock trades to come directly from the
traders' (traitors/frauds) bottom lines and provide a disincentive for the
churn-and-earn fraud which is tantamount to a wasteful tax on the economy. Even
goldman token Christian paulison from jew fraud wall street couldn't stem the tide against
the blatent zionist/neocon/bush
co failure accross the board as the wall street
frauds show record profits financed, albeit indirectly, by huge deficits, both
trade and budget. Obfuscating mergers blur the picture to provide cover for up
move talking points in defiance of reality. Stagflation
and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah.
Pre-election core inflation rate report good …..riiiiight…..but savings rate
still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent
·
Sands
Casino to Close After 26 Years AP
·
Disney
Reports Higher 4Q, Yearly Profit AP
·
Delta
Air Lines Posts $52M Profit in 3Q AP
·
Oil
Prices Stabilize After Election Jump AP
Stocks snapped a three-day winning streak Thursday as
growing anxiety about possible drug concessions and surging oil prices
overshadowed a blow out quarter from Cisco Systems.Health Care, already this
year's poorest performing S&P sector, became even more unfavorable today.
Albeit still up modestly on the year, the sector extended its underperformance
for a second straight day as investors fretted over whether a
Democratic-controlled Congress will make a push to change the Medicare
Prescription Drug benefit in order to lower drug prices. Such fears called into
question the valuations of several drug companies recently hitting 52-week
highs. To wit, Pfizer (PFE 25.82 -0.80), Merck (MRK 42.92 -1.42) and Johnson
& Johnson (JNJ 66.17 -1.82) were among today's worst performing Dow
components.The absence of leadership Financials and Industrials also weighed on
sentiment that the University of Michigan showed earlier in the session was
already eroding. Telecom, this year's best performing S&P sector (+26%),
was another weak spot for stocks. Concerns that the FCC will continue to delay
AT&T's (T 33.38 -0.99) proposed $83 bln merger with BellSouth (BLS 43.52
-1.05), amid ongoing anti-trust inquiries from the House Energy Panel, prompted
investors to lock in some of the sector's impressive year-to-date gains.Among
the four sectors finishing in positive territory, Materials paced the way as a
weaker dollar made steel and gold stocks more attractive. However, as the least
influential of the 10 S&P sectors, its nearly 1.0% advance was barely
noticed. Energy was another beneficiary of a weak greenback and bright spot for
investors, but not necessarily for consumers, since the sector rose in sympathy
with oil prices closing above $61/bbl for the first time this month. Crude for
December delivery surged 2.2% to a two-week high of $61.16/bbl following a
larger than expected drawdown in weekly natural gas inventories.Technology was
another focal point Thursday and had the Nasdaq trading in positive territory
until a renewed wave of selling interest late in the day become too much for
the bulls to bear. Providing the biggest boost was a 6.5% surge in Cisco
Systems (CSCO 26.72 +1.62) to a two-year high. The tech bellwether and
suggested holding in the Briefing.com Active Portfolio topped Wall Street
forecasts and issued upside Q2 revenue growth guidance last night. That
prompted several analysts to raise their estimates and price targets, helping
the stock extend its weekly advance to more than 12% and restore some optimism
about the Tech sector's earnings prospects. BTK -2.3% DJ30 -73.24 DJTA -1.0%
NASDAQ -8.93 NQ100 -0.6% R2K -1.0% SOX -1.9% SP400 -0.6% SP500 -7.39 XOI +0.8%
NASDAQ Dec/Adv/2015/1015/2.26 bln NYSE Dec/Adv/Vol 1893/1343/1.75 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $61; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-8-06) Blazing full
Moon and lunatical suckers
bear market rally is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 19, Standard & Poor's 500 index up 2, and the Nasdaq composite index up 9,
all very commissionable on heavy
volume as in final pre-election result push for bush, which fell very short. The
republicans who lockstepped with war criminal dumbya bush deserved to lose. The frauds on wall street now
looking for the new corporate welfare program for which to sell the sizzle ie., stem
cells, etc.. The know-nothing pundits were saying the up move without any
rational basis was predicated upon the the falsity
that gridlock in washington is welcomed and good
because no regulation of, ie., fraud on wall street,
etc., can be passed. How about a tax on stock trades to come directly from the
traders' (traitors/frauds) bottom lines and provide a disincentive for the
churn-and-earn fraud which is tantamount to a wasteful tax on the economy. Even
goldman token Christian paulison from jew fraud wall street couldn't stem the tide against
the blatent zionist/neocon/bush
co failure accross the board as the wall street
frauds show record profits financed, albeit indirectly, by huge deficits, both
trade and budget. Obfuscating mergers blur the picture to provide cover for up
move talking points in defiance of reality. Stagflation
and full employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah.
Pre-election core inflation rate report good …..riiiiight…..but savings rate
still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent
Dems Pledge to Scrutinize Big Business
AP - The new masters of the House, the Democrats, are promoting an economic
agenda that would put more money in the pockets of ordinary citizens and
government, while leading to greater oversight of big business.
·
Dow
Reaches New High on Election Results AP
·
Two
Billionaires Bid to Acquire Tribune AP
·
News
Corp. Earns $843M in First Quarter AP
·
Cisco
Systems 1Q Profit Jumps 27 Percent AP
What was initially shaping up to be
a victory for the bears, fueled primarily by political uncertainty in the wake
of Tuesday's mid-term elections, ultimately ended on a
positive note as the market's underlying bullish tone returned. Even
though market gains were modest, strong industry leadership and earnings
optimism helped the Dow close at another new all-time high.With
no scheduled economic reports to potentially rattle the market today, coupled
with very little in the way of corporate news, an indecisive political picture
garnered added attention right out of the gate. For days, the stock market was
pricing in the possibility of Democrats taking control of the House, which came
to fruition; but the likelihood of Republicans also losing control in the
Senate was not anticipated. Thus, with the balance of power in the Senate still
up in the air, such uncertainty sparked a sense of early caution that prompted investors
to take some money off the table.That is until
Microsoft (MSFT 29.00 +0.05) said around 2:00 ET that Windows Vista is
officially complete and ready to ship. Even though MSFT shares closed up
modestly, renewed confidence about earnings prospects from the software
giant helped remind investors about the upcoming earnings release of a fellow
tech bellwether -- Cisco Systems (CSCO 25.10 +0.26). Up as much as 2.2%
intraday and nearly 50% since bottoming out on Aug. 4, Cisco surging to a
two-year high for a third straight day provided some notable support for the
tech-heavy Nasdaq. Cisco is
a suggested holding in the Briefing.com Active Portfolio.From
a sector standpoint, though, Energy turned in the best performance as oil
prices closed at session highs near $60/bbl. Crude for December delivery surged
1.8% following a larger than expected drawdown in weekly distillate supplies;
but the Energy sector's leadership acted as an offset to the commodity's
potential to sustain inflation pressures. Exxon Mobil (XOM 74.13 +1.60) soared
2.2% to finish at a new all-time high.Among the other
17 Dow components trading higher, and helping to offset a 3.4% drubbing in
Merck (MRK 44.35 -1.55), was Altria Group (MO 81.43 +1.10). Tobacco stocks got
a lift after Californians voted down a ballot initiative that would have
quadrupled the state's cigarette taxes. While Democrats pledged to negotiate
with drug makers to lower prices, Merck's decline was exacerbated after it
disclosed four tax disputes with potential liabilities totaling $5.58 bln a day earlier. Health Care was the only sector closing
lower today. DJ30 +19.77 NASDAQ +9.06 NQ100 +0.5% R2K +0.7% SP400 +0.6% SP500
+2.88 XOI +1.4% NASDAQ Dec/Adv/Vol 1258/1775/2.09 bln NYSE Dec/Adv/Vol
1200/2032/1.61 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-7-06) Blazing full
Moon and lunatical suckers
bear market is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 51, Standard & Poor's 500 index up 3, and
the Nasdaq composite index
up 9, all very commissionable on heavy volume in final pre-election result push for bush. The know-nothing pundits are now saying the up move without any rational basis is predicated upon the falsity that gridlock in washington is welcomed and good because no regulation of, ie., fraud on wall street, etc., can be passed. How about a tax on stock trades to come directly from the traders' (traitors/frauds) bottom lines and provide a disincentive for the churn-and-earn fraud which is tantamount to a wasteful tax on the economy. Even token Christian paulsen from jew fraud wall street couldn't stem the tide against the blatent zionist/neocon/bush co failure accross the board as the wall street frauds show record profits financed, albeit indirectly, by huge deficits, both trade and budget. Obfuscating mergers blur the
picture to provide cover for up move talking points in defiance of reality.
Stagflation and full
employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah.
Pre-election core inflation rate report good …..riiiiight…..but savings rate
still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent
·
EU
Chief Asks China to Fight Piracy AP
·
Oil
Prices Rise in Asian Trading AP
·
FedEx
Cancels Airbus Order to Buy Boeing AP
·
Cardinal
Faces 401(k) Complaint AP
Stocks closed off their intraday highs but still
turned in a respectable performance Tuesday, especially on the heels of such a
surprise rally a day earlier.Investors becoming even more convinced that
today's mid-term elections will result in legislative gridlock -- a split
Congress potentially ill-equipped to ratify major policy initiatives -- was
cited as one reason behind today's follow-through buying efforts. Fears of
missing out on what the bears believe has already come and gone -- a year-end
rally -- coupled with a sell-off in oil, lower bond yields and some decent
sector leadership, provided a more likely motivation.With oil prices up nearly
4% over the previous two sessions, a 1.8% decline that pushed the commodity
back below $59/bbl lent some additional relief. Crude for December delivery closed
at $58.93/bbl (-$1.09) ahead of a report tomorrow that is expected to show
weekly inventories remain well supplied since doubts about OPEC members living
up to their proposed production cuts continue to linger.Further, with
Treasury yields soaring across the curve last Friday, more relief on the
interest-rate front was also welcoming news for equity traders. With no
influential economic data to digest, bonds got an election-day boost as
political uncertainty sparked some safe-haven refuge in Treasuries. While that
provided a floor of support for the rate-sensitive Financials, the most
influential leadership came from Industrials.Dow component Boeing (BA 84.77
+4.29) soared 5.3% after FedEx (FDX 115.01 +1.07) cancelled an Airbus order and
said it will now buy 15 new Boeing 777 freighters. That's roughly a $3.5 bln
deal based on list prices. The sector also benefited from a 5.9% surge in
Emerson Electric (EMR 87.40 +4.84), which followed up a Q4 EPS surprise with a
dividend increase and an announced two-for-one stock split, as well as an
analyst upgrade on Southwest Airlines (LUV 15.33 +0.39). That positioned
Airlines (+2.6%) as one of the day's best performing S&P industry
groups.BTK +1.2% DJ30 +51.22 DJTA +0.5% DJUA -0.2% DOT +0.3% NASDAQ +9.93 NQ100
+0.5% R2K +0.1% SOX +1.9% SP400 +0.2% SP500 +3.06 XOI -1.0% NASDAQ Dec/Adv/Vol
1433/1640/2.10 bln NYSE Dec/Adv/Vol 1414/1820/1.50 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $58; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-6-06) Blazing full
Moon and lunatical suckers
bear market is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 119.51, Standard & Poor's 500 index up 15.48, and
the Nasdaq composite index
up 35.16, all very commissionable on heavy volume. Obfuscating mergers blur the
picture to provide cover for up move talking points in defiance of reality.
Stagflation and full
employment revisions pre-election.....riiiiight.
Productivity comes in at a less than expected 0 (inflationary). The only
surprise should have been that the number wasn't negative. The pundits are now
saying that the market/wall street fraud is in a state of denial regarding
economic fundamentals and that the market is substantially overbought,
overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah.
Pre-election core inflation rate report good …..riiiiight…..but savings rate
still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet
lunatics/frauds and reality is no problem. Despite pre-election deficit
spending, GNP comes in a less than expected paltry 1.6% increase with worthless
falling dollar the catch-22 precluding reality avoidance and the worst yet to
come. More nations leaving the worthless dollar as reserve currency even as
frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking)
based on corporate welfare flows with money the nation doesn't have
pre-election (record deficits). Housing prices continue their sharp decline as
bubble deflates. GM only lost 115 million. Ford lost 5.8 billion and must
restate earnings back to year 2000 is a bullish sign in the fraudulent
Dow
Ends Up Nearly 120 on Buyout Deals
AP - Wall Street roared back Monday, erasing its losses of last week after
private-equity buyout deals involving companies such as Four Seasons Hotels
Inc. and OSI Restaurant Partners Inc. revived investors' belief that stocks
still have room to run.
Four
Seasons Receives $3.7 Billion Offer AP
Abbott
Buys Out Kos Pharmaceuticals AP
Big
3 Cuts Bring Higher Rental Prices AP
Microsoft
Maps Next Step in Google Chase AP
After witnessing their first
down week since late September, the pendulum swung back to favor the bulls
Monday amid resurgence in M&A activity, some upbeat Fed speak and strong
sector leadership. The absence of
potentially disruptive economic reports also gave investors the green light to get
back into equities, especially since so much weaker than expected data of late
have prompted investors to question the sustainability of market gains. The Dow snapped a six-day losing streak while
the S&P 500 and Nasdaq
posted their biggest one-day increases since October 12. Just four days after
reports showed private equity firms set a new record for fund raising ($178 bln), several firms went on a
shopping spree Monday. Among the most notable deals was the proposed $3.7 bln buyout bid for Four Seasons Hotels (FS 82.31 +18.44).
The deal includes investors ranging from current CEO Isadore
Sharp to Saudi Prince Alwaleed Bin Talal and Microsoft (MSFT 28.86 +0.13) Chairman Bill Gates.
In addition to a renewed focus on hotels as potential takeover targets, the
Consumer Discretionary got an additional lift from restaurants. After
consulting with Wachovia Securities (WB 55.16 +0.86), OSI Restaurants (OSI
39.75 +7.32) agreed to be taken private for roughly $3.0 bln. A $2.2 bln offer
for Swift Transportation (SWFT 29.85 +5.80) that includes backing from Morgan
Stanley (MS 76.15 +1.87) also helped to renew optimism that more M&A deals
are on the horizon, providing a floor of support for the broader market and
especially the brokerage firms positioned to benefit. To wit, Financials
provided some influential leadership and got some added support late
in the day as Treasuries turned positive. As a reminder, the 10-year note on
Friday plunged 30 ticks, the biggest decline since July 21, 2005, lifting its
yield to 4.71% and taking a toll on rate-sensitive stocks. Other M&A
announcements included Abbott Laboratories' (ABT 47.45 -0.19) $3.7 bln bid for Kos Pharmaceuticals (KOSP 77.06 +26.97) and
McKesson's (MCK 49.61 +1.09) $1.8 bln offer for
Per-Se Technologies (PSTI 27.50 +3.05). Of the nine sectors closing higher,
Technology paced the way to the upside, getting a big boost from bellwether
Cisco Systems (CSCO 24.68 +0.91). The stock, which is also a suggesting
holding in the Briefing.com Active Portfolio, surged 3.8% and hit an intraday
52-week high ahead its Q1 report on Wednesday. Even Energy participated in
Monday's broad-based rally. Crude for December delivery, which was off more
than 1.0% at $58.50/bbl early on after threats of attacks on oil facilities in
Nigeria failed to materialize, closed up 1.6% at $60.07/bbl. Aside from some
short covering, OPEC suggesting some members may take further action to reduce
output at the December meeting if the market doesn't become more balanced
provided a floor of support for the commodity. Fortunately for the bulls, the
Energy sector took notice and, because of its leadership as a large contributor
to the overall earnings picture on the S&P 500, helped investors
temporarily look past oil's potential to sustain inflation pressures. Providing
an additional vote of confidence that left investors less anxious about
Tuesday's midterm elections were comments from
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $60; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-3-06)Full moon and Stocks drop still only modestly
relative to reality and rally into the close to end lower as the wall street fraud continues to suck the
suckers in; ie., as the Dow Jones industrial average
fell 32.50,
Standard & Poor's 500 index down 3.04, and the Nasdaq composite index
down 3.23, all very commissionable on
heavy volume. Stagflation and full employment revisions pre-election.....riiiiight.Productivity comes in at a less than expected 0 (inflationary). The only surprise should have been that the number wasn't negative. The pundits are now saying that the market/wall street fraud is
in a state of denial regarding economic fundamentals and that the market is
substantially overbought, overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah. Pre-election
core inflation rate report good …..riiiiight…..but
savings rate still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet lunatics/frauds and reality is no
problem. Despite pre-election deficit spending, GNP comes in a less than
expected paltry 1.6% increase with worthless falling dollar the catch-22
precluding reality avoidance and the worst yet to come. More nations leaving
the worthless dollar as reserve currency even as frauds on wall street reach
new highs (What are they smoking? Coking? or like the
dollar just cracking) based on corporate welfare flows with money the nation
doesn't have pre-election (record deficits). Housing prices continue their
sharp decline as bubble deflates. GM only lost 115 million. Ford lost 5.8
billion and must restate earnings back to year 2000 is a bullish sign in the
fraudulent
·
Berkshire's
Profit Up Nearly Fivefold AP
·
Dow
Ends Down 33 Amid Jump in Oil Prices AP
·
Several
Carriers Boost Fares by $10 RT AP
·
Ex-McKesson
Execs Acquitted of Fraud AP
Stocks closed modestly lower Friday amid a lack of
conviction that today's strong jobs report positions the economy for a
much-desired soft landing. With investors leaving no rock unturned to gauge the
severity of the economic slowdown, the stock market finally wrapped its arms
around a report that broke a string of weaker than expected economic data and
laid to rest concerns of an impending severe economic slowdown.Before the bell,
the Labor Dept. showed that October non-farm payrolls rose 92,000. While that
was below an expected rise of 125,000, initially reminiscent of the shortfall a
month earlier, it was also noted that September's small increase of 51,000 was
revised to a much higher 148,000. Also assuring there is no shortage of jobs
was an upward revision to the August figure as well, from 188,000 to 230,000.
The adjustments left the average monthly payrolls gain in line with a six-month
trend. Along with the unemployment rate unexpectedly falling to a
five-year low of 4.4% and hourly earnings inching higher, that gain provides
plenty of fuel to keep consumer spending rising at about a 3% real rate.The
Treasury market perhaps served as the best reminder today that, while the jobs
report was bullish overall, the big payroll revisions, lower unemployment and
rising wages diminish the possibility of the Fed easing anytime soon. As a
result, Treasuries sold off across the yield curve. To wit, the 10-year note
plunged 30 ticks, the biggest decline since July 21, 2005, lifting its yield to
4.71%. That eventually weighed on rate-sensitive stocks and raised valuation
concerns about growth companies dependent on borrowing, which resulted in the
lack of leadership from influential sectors like Financials and
Technology.Throw in a 2.2% surge in oil prices to $59.13/bbl and subsequent
weakness from the likes of retailers and transports, and the market struggled
to keep early buying efforts intact. Crude oil futures climbed for the first
time in three sessions following reports that Nigerian militants may stage a
large-scale attack on oil facilities in the region. Energy was the only sector
to close higher. BTK +0.1% DJ30 -32.50 DJTA -0.7% DJUA -0.8% DOT -0.3% NASDAQ
-3.23 NQ100 -0.4% R2K +0.3% SOX +0.5% SP400 +0.2% SP500 -3.04 XOI +1.8% NASDAQ
Dec/Adv/Vol 1283/1740/1.86 bln NYSE Dec/Adv/Vol 1760/1502/1.43 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-2-06) Stocks drop still only modestly
relative to reality and rally into the close to end lower as the wall street fraud continues to suck the
suckers in; ie., as the Dow Jones industrial average
fell 12.48,
Standard & Poor's 500 index down .47, and the Nasdaq composite index
down .33, all very commissionable on
heavy volume. Productivity comes in at a less than expected 0 (inflationary). The only surprise should have been that the number wasn't negative. The pundits are now saying that the market/wall street fraud is
in a state of denial regarding economic fundamentals and that the market is
substantially overbought, overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah. Pre-election
core inflation rate report good …..riiiiight…..but
savings rate still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet lunatics/frauds and reality is no
problem. Despite pre-election deficit spending, GNP comes in a less than
expected paltry 1.6% increase with worthless falling dollar the catch-22
precluding reality avoidance and the worst yet to come. More nations leaving
the worthless dollar as reserve currency even as frauds on wall street reach
new highs (What are they smoking? Coking? or like the
dollar just cracking) based on corporate welfare flows with money the nation
doesn't have pre-election (record deficits). Housing prices continue their
sharp decline as bubble deflates. GM only lost 115 million. Ford lost 5.8
billion and must restate earnings back to year 2000 is a bullish sign in the
fraudulent
AP - Microsoft Corp. has embraced Novell Inc.'s
open-source software platform, forming a technological truce between two
longtime antagonists who want to make it easier for the still-dominant Windows
operating system and the increasingly popular Linux system to work together.
·
Daewoo
Exec Gets 8 1/2-Year Prison Term AP
·
Without
Deal, Des Moines to Lose Fox AP
·
AT&T-BellSouth
Vote Delayed by FCC AP
·
PC
Maker Gateway Cuts Nearly 100 Jobs AP
As if the
day before monthly employment data are released doesn't already create a
sense of nervousness, today's weak economic news caused some added
consternation. However, what was shaping up early on to be a bigger victory for
the bears actually ended with only minimal, almost nonexistent, market losses.
That speaks volumes to the underlying bullish tone responsible for stocks
running virtually uncontested since bottoming out in July.Before the bell, the
Labor Dept. showed that productivity slowed to a standstill from July through
September. While that does not necessarily reflect a trend in underlying
productivity, it does raise concerns that companies may try to offset lower
output with higher wages, which was evident in a larger than expected 3.8% rise
in unit labor costs. Pegged as a key inflation indicator, that left labor costs
at a year/year rate of 5.3% for Q3 -- the biggest gain since 1982.
Inflation hawks naturally will be focused on tomorrow's hourly earnings
figure.Also weighing on investor sentiment Thursday were October same-store
sales results that can best be described as mixed. However, many viewed the
majority of retailers missing upwardly revised expectations as a huge
disappointment, especially since the all-important holiday selling season is
right around the corner.As expected, Wal-Mart (WMT 48.26 -0.59) confirmed that
October comps rose an anemic 0.5%; however, investors were not anticipating the
retail giant to say November comps are now expected to be flat, signaling its
worst monthly sales growth in more than a decade. Competitors Target (TGT 56.92
-0.78) and Costco (COST 52.93 +0.02), which missed analysts' estimates, also
did little to quell worries about how healthy the holiday season will be.
Acting as offsets with solid results were department stores, such as JC Penney
(JCP 77.04 +1.91) and Nordstrom (JWN 46.72 +0.42), as well as specialty apparel
retailer Limited Brands (LTD 29.67 +0.86).Technology was also in focus, but an
analyst downgrade on Intel (INTC 20.68 -0.34) eventually outweighed an upgrade
on Dell (DELL 24.81 +0.79). Also playing into the price action of both stocks
was confirmation that Dell has finally begun selling laptops that feature chips
from Advanced Micro Devices (AMD 20.83 +0.10), which further reduces Dell's
reliance on Intel processors.Meanwhile, Health Care posted a respectable gain
as the pending CVS-Caremark deal raised the possibility of more industry
consolidation, which plays into our Overweight rating on the sector and
favorable outlook on PBMs and HMOs. However, it was only among four sectors
posting gains. The other three -- Energy, Material and Telecom -- did
little to act as an offset to the absence of buyers ahead of Friday's jobs
report. DJ30 -12.48 NASDAQ -0.33 SP500 -0.47 NASDAQ Dec/Adv/Vol 1771/1260/1.92
bln NYSE Dec/Adv/Vol 1794/1449/1.62 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $57; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(11-1-06) Stocks drop still only modestly
relative to reality and rally into the close to end lower as the wall street fraud continues to suck the
suckers in; ie., as the Dow Jones industrial average
fell 49.71,
Standard & Poor's 500 index down 10.13, and the Nasdaq composite index
down 32.36, all very commissionable on
heavy volume. The pundits are now saying that the market/wall street fraud is
in a state of denial regarding economic fundamentals and that the market is
substantially overbought, overvalued, overfrauded,
over, etc., the manufacturing index coming in lower than expectations. Consumer
sentiment unexpectedly fell.....daaaaah. Pre-election
core inflation rate report good …..riiiiight…..but
savings rate still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet lunatics/frauds and reality is no
problem. Despite pre-election deficit spending, GNP comes in a less than
expected paltry 1.6% increase with worthless falling dollar the catch-22
precluding reality avoidance and the worst yet to come. More nations leaving
the worthless dollar as reserve currency even as frauds on wall street reach
new highs (What are they smoking? Coking? or like the
dollar just cracking) based on corporate welfare flows with money the nation
doesn't have pre-election (record deficits). Housing prices continue their
sharp decline as bubble deflates. GM only lost 115 million. Ford lost 5.8
billion and must restate earnings back to year 2000 is a bullish sign in the
fraudulent
CVS
Buying Caremark for About $21.3B
AP - Drugstore operator CVS Corp.
announced Wednesday it is buying pharmacy benefits manager Caremark Rx Inc. for
about $21.2 billion in stock.
GM,
Toyota, Ford Post Big Sales Gains AP
Dow
Ends Down 50 on Weak Economic Data AP
Wal-Mart
Revises Its Attendance Policy AP
Cable,
AOL Lift Time Warner's 3Q Results AP
With the Dow and Nasdaq
just one day removed from turning in their best October performances in three
years, more evidence concerning the severity of the economic slowdown in the
U.S. gave investors an excuse to lock in some recent market gains Wednesday.It is worth noting, though, that today's pullback
wasn't all that surprising given the market's knack for knocking trends.
After all, the Dow has closed higher on the first day of November 22 times in
the last 27 years, according to the Stock Trader's Almanac. Keep in mind too
that September is historically the worst month of the year for stocks yet the
three major indices on average gained 2.8%.With the market's focus shifting
toward economic data, given that Q3 is well on track to post a 13th straight
quarter of double-digit profit growth, all eyes today were on the ISM Index,
especially after the Chicago PMI hit a 14-month low a day earlier. The ISM
index unexpectedly fell to 51.2% in October (consensus 53.0%) -- its lowest
level since June 2003. The reading exacerbated worries that the economy
is slowing too much. On a more positive note, the report's prices paid
component fell off sharply to 47.0% (the lowest since Feb. 2002) from 61.0%,
easing concerns from an inflation standpoint, which is consistent with our view
that a soft landing is developing nicely for the economy.Be
that as it may, a market more pre-occupied about the pace of economic growth
viewed the data as disappointing and found a reason to take some money off the
table. Among the nine sectors losing ground, Technology -- one of last month's
best performers -- paced the way lower. Financials, another strong sector of
late amid the growing probability of an interest rate cut in the first half of
2007, also sold off.Health Care was the primary focus
Wednesday after reports surfaced that Caremark Rx (CMX 48.03 -1.20) was in
talks with CVS Corp (CVS 29.05 -2.33) regarding a possible "merger of
equals." However, while confirmation later in the day of a $21 bln deal plays into our Overweight rating on Health Care,
the lack of a premium buyout price erased what was a 9% gain in CMX
shares. CMX closed down 2.4%, turning today's best performer at the onset
of trading into one of the day's biggest laggards. DJ30 -49.71 NASDAQ -32.36
SP500 -10.13 NASDAQ Dec/Adv/Vol 2252/826/2.06 bln NYSE Dec/Adv/Vol
2127/1127/1.75 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $58; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-31-06) Stocks drop
still only modestly relative to reality and rally into the close to end mixed as the wall street fraud continues to suck the suckers in; ie., as the Dow Jones industrial average fell 5, Standard & Poor's 500 index up 0, and the Nasdaq composite index up 2, all very commissionable on heavy volume. Consumer sentiment unexpectedly fell.....daaaaah. Pre-election core
inflation rate report good …..riiiiight…..but
savings rate still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet lunatics/frauds and reality is no
problem. Despite pre-election deficit spending, GNP comes in a less than
expected paltry 1.6% increase with worthless falling dollar the catch-22
precluding reality avoidance and the worst yet to come. More nations leaving
the worthless dollar as reserve currency even as frauds on wall street reach
new highs (What are they smoking? Coking? or like the
dollar just cracking) based on corporate welfare flows with money the nation
doesn't have pre-election (record deficits). Housing prices continue their
sharp decline as bubble deflates. GM only lost 115 million. Ford lost 5.8
billion and must restate earnings back to year 2000 is a bullish sign in the
fraudulent
After consolidating one of the best month's of market
gains in almost a year, the underlying bullish tone responsible for lifting
stocks since mid-July returned late in the day. To wit, the Dow, S&P 500
and Nasdaq rose 3.4%, 3.1% and 4.8%, respectively, in October. Tuesday's
overall action, though, showed signs of fatigue on the part of buyers who, with
two-thirds of the S&P 500 having already reported quarterly results, are
beginning to shift their focus to economic data.While Friday's employment
report remains the biggest potential market mover this week, today's batch of
soft economic data fueling some uncertainty about the pace of economic growth
was eventually too much to overcome.Just after the market opened, investors
already dealing with an unexpected decline in October Consumer Confidence
received the latest update on the health of regional manufacturing activity.
Unfortunately for the bulls and to the delight of those questioning whether the
Fed can in fact engineer a successful soft landing, the Chicago PMI fell to its
lowest level (54.1%) in October since August 2005. After climbing to its
strongest level in more than a year a month earlier, the disappointment took
some steam out of early buying efforts.Bonds, though, took notice and
accordingly pushed yields across the curve to session lows. However, not even
the yield on the 10-year note slipping to its lowest level (4.60%) in more than
three weeks was enough to lend support to the rate-sensitive Financials sector.
In fact, the absence of influential sector leadership posed the biggest problem
for the bulls.Technology provided some support again, but with October
historically providing opportunities for bargain hunters to pick up beaten-down
tech stocks, the sector's continued upward momentum wasn't all that surprising.What
was unforeseen was a more than 2.5% swing in the price of oil that closed the
commodity slightly higher on the day and back above $58/bbl. While short
covering in oil renewed some leadership in Energy, the turnaround in crude took
an added toll on the likes of retail and transportation stocks already reeling
from concerns about the economy slowing too much.Not even defensive-oriented
consumer staples stocks caught a break despite a better than expected Q1 report
from Procter & Gamble (PG 63.38 -0.43). While beating expectations for
the 14th straight quarter, guidance that was basically in line with forecasts
left investors wanting more, especially after the Dow component hit a new
52-week high heading into its report. DJ30 -5.77 NASDAQ +2.94 SP500 +0.01
NASDAQ Dec/Adv/Vol 1593/1463/1.96 bln NYSE Dec/Adv/Vol 1634/1633/1.58
bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $58; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-30-06) Stocks drop
still only modestly relative to reality and rally into the close to end mixed as the wall street fraud continues tosuck the suckers in; ie., as the Dow Jones industrial average fell 3.76, Standard & Poor's 500 index up 0.59, and the Nasdaq composite index up 13.15, all very commissionable on heavy volume. Pre-election core
inflation rate report good …..riiiiight…..but
savings rate still negative and walmart
sales/profits/outlook substantially below expectations but what the heck,
they’re wallstreet lunatics/frauds and reality is no
problem. Despite pre-election deficit spending, GNP comes in a less than
expected paltry 1.6% increase with worthless falling dollar the catch-22
precluding reality avoidance and the worst yet to come. More nations leaving
the worthless dollar as reserve currency even as frauds on wall street reach
new highs (What are they smoking? Coking? or like the
dollar just cracking) based on corporate welfare flows with money the nation
doesn't have pre-election (record deficits). Housing prices continue their
sharp decline as bubble deflates. GM only lost 115 million. Ford lost 5.8
billion and must restate earnings back to year 2000 is a bullish sign in the
fraudulent
Merck
to Buy Biotech Firm for $1.1B
AP - Pharmaceutical company Merck & Co. said Monday it agreed to pay an
eye-popping $1.1 billion to buy Sirna Therapeutics
Inc., a tiny biotechnology firm developing drugs based on new technology at the
heart of last month's Nobel Prize for medicine award.
Amerigroup Fined $48M for Discrimination AP
Dow
Drops 4 on Lackluster Wal-Mart Sales AP
Comair
Seeks to Impose Cuts on Pilots AP
Goodyear
to Close Texas Plant, Cut Jobs AP
The major averages
closed mixed Monday, as the day's action was more reminiscent of portfolio
rebalancing than anything else. To wit, even though the Nasdaq
is outpacing gains on the Dow and S&P 500 this month, as it did again
today, the tech-heavy Composite still trails the blue chip indices'
year-to-date performances.Thus, playing true to
trend, with October being a common month to scoop up beaten-down tech
names, Technology turned in the day's best performance. In fact, an upgrade
from Merrill Lynch on one of the sector's worst performers -- Yahoo! (YHOO
25.95 +0.61) -- helped get the ball rolling during what was shaping up to be
another day of broad-based consolidation. As of Friday's close, Yahoo! was down
35% year to date and hit a 52-week low on October 20, presenting an opportunity
for bargain hunters looking to capitalize on underappreciated stocks positioned
to benefit from a seasonally strong holiday season, which supports our
Overweight rating on tech.An analyst upgrade on
KLA-Tencor (KLAC 49.39 +1.20) renewed enthusiasm for depressed semiconductor
stocks and also helped to offset a 3.0% decline in Verizon Communications (VZ
37.67 -1.17), the Dow's worst performing component Monday. Verizon topped Wall
Street forecasts; but, the company saying that spending on fiber initiatives
may hurt the bottom line prompted investors to consolidate some of the stock's
35% year-to-date advance and rotate money out of this year's best performing
sector -- Telecom -- and into this year's worst performer -- Tech. Another
sector experiencing a similar extraction of investment dollars was Energy, this
year's second best performing sector, as oil prices plummeted. Crude for
December delivery fell nearly 4% to $58.36/bbl amid expectations that
inventories remain well supplied, especially with warmer than expected weather
conditions reducing demand for distillates like heating oil.Meanwhile,
Wal-Mart (WMT 49.48 -1.25) warned that October same-store sales are expected to
be up just 0.5% -- the weakest gain in almost six years and well below original
forecasts calling for 2.0-4.0% growth. That left some questioning the health of
the consumer heading into the all-important holiday season. However, the
growing realization that Wal-Mart's woes appear to be more of a
company-specific issue than an economy-wide concern left the rest of the retail
group free to take advantage of oil's decline and diminishing prospects of the
commodity's potential inflationary characteristics.With
regard to inflation, the Commerce Dept. before the market opened showed that
the core-PCE deflator rose 0.2% in September, matching economists' forecasts to
leave the year/year rate at 2.4%. While that is still a bit higher than policy
makers would like, the Fed's favored inflation gauge now below the 11-year high
of 2.5% registered a month earlier helped to curb concerns of an uptrend.
Overall, though, it was actually a neutral factor for the financial markets.
BTK -0.2% DJ30 -3.76 DJTA +0.8% DJUA -0.1% DOT +0.9% NASDAQ +13.15 NQ100 +0.6%
R2K +0.5% SOX +1.1% SP400 +0.2% SP500 +0.59 XOI -1.6% NASDAQ Dec/Adv/Vol 1409/1647/1.68 bln NYSE
Dec/Adv/Vol 1552/1721/1.30 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $58; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-27-06)
Stocks drop still only modestly relative to reality as the wall street fraud
continues to suck the suckers in; ie., as the Dow
Jones industrial average fell 73.40, Standard &
Poor's 500 index lost 11.74, and the Nasdaq composite index down 28.48,
all very commissionable on heavy volume. Despite pre-election deficit spending, GNP comes in a less than expected paltry 1.6% increase with worthless falling dollar the catch-22 precluding reality avoidance and the worst yet to come. More nations leaving the worthless dollar as reserve currency even as frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking) based on corporate welfare flows with money the nation doesn't have pre-election (record deficits). Housing prices continue their sharp decline as bubble deflates. GM only lost 115 million. Ford
lost 5.8 billion and must restate earnings back to year 2000 is a bullish sign
in the fraudulent
AP - The
economy has slowed to a snail's pace, growing in the just-finished quarter at
the slowest rate in more than three years and stirring fresh debate about the
country's financial health heading into the elections.
$18M
for Calif. Man's Case Against Vons AP
Chevron
3Q Profit Soars to $5 Billion AP
Britain
Attacks U.S. Online Gambling Ban AP
Auto
Sales Gains Expected for October AP
After several failed attempts to lock in some of the
market's impressive gains of late, sellers finally finished what they started,
closing stocks lower across the board.With the Dow just a day removed from
hitting its 13th record high in 18 days, a sense that stocks were overbought on
a short-term basis left the market looking tired and vulnerable in pre-market
action. Also acting as a constraint before the opening bell even sounded was a
weaker than expected GDP report.At 8:30 ET, the Commerce Dept. reported that Q3
GDP rose only 1.6% (consensus 2.1%) in Q3, the slowest pace in three years, due
primarily to a huge 17% drop in residential construction activity which shaved
1.1% off the GDP gain. That wasn't all that surprising, though, since Fed Chairman
Bernanke said on October 4th that the U.S. housing market is in a
"substantial correction,'' which will lop about one percentage point off
economic growth in the second half of the year.The GDP report also showed that
consumer spending picked up and that inflation, as reflected in a lower than
expected 1.8% rise on the chain deflator, remains contained, indicative of a
soft landing. Be that as it may, the weak GDP headline left investors
questioning the sustainability of the recent advance, which opened the door for
anything negative to push stocks even lower.Then, as it appeared the bulls
might simply surrender a modest pullback to some characteristic consolidation
following such a huge run-up, sellers wrapped their arms around a negative
research note and ran wit hit. Between 1:00 and 2:00 ET, it was reported that
Goldman Sachs is cutting its growth forecast for motherboard shipments. After
the broker reportedly said motherboard demand is "falling off a
cliff," tech stocks did just that, selling off and removing notable sector
leadership that took a toll on overall sentiment. Better than expected reports
from blue chips like Microsoft (MSFT 28.34 -0.01) and Chevron (CVX 67.64 +0.14)
were all but forgotten. DJ30 -73.40 NASDAQ -28.48 SP500 -11.74 NASDAQ
Dec/Adv/Vol 2023/1004/2.24 bln NYSE Dec/Adv/Vol 2116/1162/1.55 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $60; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-26-06) Suckers
bear market rally is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 29, Standard & Poor's 500
index up 7 and the Nasdaq composite index up 22, all very commissionable on heavy volume. More nations leaving the worthless dollar as reserve currency even as frauds on wall street reach new highs (What are they smoking? Coking? or like the dollar just cracking) based on corporate welfare flows with money the nation doesn't have pre-election (record deficits). Housing prices continue their sharp decline as bubble deflates. GM only lost 115 million. Ford
lost 5.8 billion and must restate earnings back to year 2000 is a bullish sign
in the fraudulent
AP - Microsoft
Corp., which is gearing up to release new versions of its two most important
products, says it started its fiscal year on the right foot with quarterly
results that exceeded expectations.
Home
Prices Plunge by Most in 35 Years AP
Oil
Prices Rise Above $60 a Barrel AP
Wall
Street: Has Sun Turned a Corner? AP
Exxon
Posts $10.49B Profit; Shares Up AP
Home
Price Drop Is Largest in 35 Years...
With the Fed decision in the rearview mirror and the
policy statement having a less hawkish tone than initially feared Wednesday,
the market's focus returned to earnings Thursday; and, not surprisingly, they
continued to top Wall Street estimates.Today's headliner was none other than
the world's largest company by market capitalization, Exxon Mobil (XOM 71.62 +0.61).
Shares opened at a historic high after the company handily beat. Despite
a 1.7% pullback in oil prices, XOM ultimately closed at an all-time high
to help power the Dow to its 13th record close in 17 days.Staying in the energy
patch, oil prices slipping back below $61/bbl was just one of the many factors
boding well for the improved spending patterns and earnings prospects that
helped Consumer Discretionary turn in the day's best performance. The sector,
which we upgraded to Market Weight in late September, got its biggest boost
from a 3.2% surge in its most influential component -- Comcast (CMCSA 40.00
+1.24). The stock, which is also among the ten heaviest weighted companies on
the predominantly tech-heavy Nasdaq, closed at a 52-week high after Q3 profits
soared 46% year/year.Also providing sector support were homebuilders, as a Q4
warning from Pulte Homes (PHM 32.60 +0.40) was overshadowed by a decline in
borrowing costs and a report that new home sales unexpectedly rose 5.3% in
September to a 1.075 mln annual rate - the most in three months. Median prices
plunging at the fastest rate (-9.7%) in 35 years, however, did temporarily
raise concerns that consumers will drastically rein in spending. Fortunately
for buyers, the underlying bullish tone returned in afternoon trading to again
send the bears looking for cover.In fact, the Commerce Dept. provided a
separate report before the bell that provided more evidence that the Fed is on
track with its objective of engineering a soft landing. At 8:30 ET, the report
showed that non-defense capital goods orders excluding transportation rose a
healthy 1.1%, suggesting that overall investment trends are holding up well.
Durable goods orders for September rose 7.8%, the biggest increase in six years
given a large jump in aircraft orders. While that news typically bodes
well for Boeing (BA 79.06 -1.80), the day's worst performing Dow component
(-2.2%) losing a huge plane order (worth about $10 bln at list prices) to rival
Airbus prevented the Industrials sector from providing any upside
leadership.Financials also provided some notable support, fueled by
falling bond yields and continued enthusiam for brokerage stocks, which
plays into our Overweight rating on the sector. In particular, Goldman Sachs
(GS 193.38 +4.77) hit a historic high after it was hired by Clear Channel
Communications (CCU 35.48 +3.13) to help the media giant evaluate strategic
alternatives. Clear Channel soaring nearly 10% was yet another source of
support for the discretionary sector. DJ30 +28.98 NASDAQ +22.51
SP500 +6.86 NASDAQ Dec/Adv/Vol 1014/2046/2.15 bln NYSE Dec/Adv/Vol
1089/2197/1.69 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $61; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-25-06) Waning full
Moon and lunatical suckers
bear market rally is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 6, Standard & Poor's 500
index up 4 and the Nasdaq composite index up 11, all very commissionable on heavy volume.More nations leaving the worthless dollar as reserve currency even as frauds on wall street reach newhighs based on corporate welfare flows with money the nation doesn't have pre-election. GM only lost 115 million. Ford
loses 5.8 billion and must restate earnings back to year 2000 is a bullish sign
in the fraudulent
AP - The Federal Reserve held interest rates steady yet again, noting the
economy had slowed but saying growth would probably pick up in the months
ahead.
Report:
Lockheed Cuts Cost Amid Pressure AP
GM,
Chrysler Group Post 3Q Losses AP
CITIC
Group to Buy Kazakhstan Oil Assets AP
College
Degree Worth Extra $23,000/year AP
The indices finished near their best levels of the
session as a Fed policy statement that offered no surprises helped investors
refocus on the bottom line -- another batch of better than expected earnings
reports. Although it posted a small gain, the Dow closed at another record
high.As expected, the Fed left the overnight lending rate unchanged at 5.25%
for a third straight meeting. Given that the risk going into the report was
that it would place a heightened emphasis on inflation concerns,
acknowledgement that "the economy seems likely to expand at a moderate pace,"
but not at such a strong pace as to suggest the Fed is on the brink of
tightening again, offered some relief.Further, Richmond Fed President Jeffrey
Lacker was the only member preferring a 1/4% hike. While Lacker's third
straight dissention made the Fed's pause less compelling, it also lent some
credibility to the Fed's focus on keeping elevated levels of core inflation
under control. While the language of the policy statement was essentially the
same, today's directive excluded the reference about the "prices of energy
and other commodities" having the potential to sustain inflation pressures
over time.Directing the market's gains, though, was in fact strong leadership
from the profit engine that is Energy (+1.7%) as a 3.4% surge in oil prices
renewed optimism about the sector's ability to generate strong profits. To wit,
ConocoPhillips (COP 62.84 +1.44) handily beat expectations while Exxon Mobil
(XOM 70.95 +1.06) touched a new all-time high intraday ahead of its earnings
report tomorrow morning. Crude oil futures closed at $61.37/bbl following an
unexpected drawdown in weekly crude supplies and amid reports of more unrest in
Nigeria.Among today's biggest names reporting was Altria Group (MO 82.10
+2.28), which missed analysts' expectations but surged nearly 3% after raising
its full-year profit outlook and finally setting a timetable for spinning off
its 88% stake in Kraft Foods (KFT 35.31 -0.05). Also lending support to
the Consumer Staples sector were strong Q3 reports from Colgate-Palmolive
(CL 62.11 +1.64) and Reynolds American (RAI 65.27 +0.87).As evidenced by the
Nasdaq turning in the best performance among the majors, Technology also
offered some notable leadership. Semiconductor Equipment (+3.2%) got a big
boost from KLA-Tencor (KLAC 49.59 +3.83), which posted a 30% jump in Q1 revenue
and raised its outlook for Q2. Adobe Systems (ADBE 38.94 +0.85) backing its Q4
guidance lent support for the software group. Amazon.com (AMZN 37.68 +4.05),
which is a component in the Consumer Discretionary sector, soared 12%
after announcing cutbacks to improve margins. Its report gave a
boost to Internet stocks across the board. Conversely, General Motors (GM 34.71
-1.48) acted as a drag on the sector, as its better than expected earnings
report was greeted with a sell-the-news response. GM had gained nearly
9.0% over the last three sessions to a 52-week high in anticipation of a solid
report.The Industrials sector was also in focus after Dow component Boeing (BA
80.83 -2.76) topped expectations; but a shortfall on revenues and revised FY06
guidance offset strong earnings-induced gains from Norfolk Southern (NSC 53.73
+4.93) and Ryder System (R 53.60 +1.54). The latter two helped the Dow Jones
Transportation Average hit its best levels in three months.Failing to participate
in today's market gains was Health Care. Express Scripts (ESRX 66.01 -6.24)
posted a 13% year/year rise in Q3 earnings, but shares plunged 8.6% after
management said proposed changes to benchmark drug pricing would have a
material adverse effect on its future results. In addition to weakness in PBMs,
today's worst performing S&P industry group, HMOs, was also a weak spot
after a cut by WellPoint (WLP 76.53 -2.09) to its full-year enrollment
forecast overshadowed a 27% year/year rise in Q3 profits. DJ30 +6.80 NASDAQ
+11.75 SP500 +4.84 NASDAQ Dec/Adv/Vol 1318/1734/2.14 bln NYSE Dec/Adv/Vol
1094/2199/1.82 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $61; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-24-06) Waning full
Moon and lunatical suckers
bear market rally is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 10, Standard & Poor's 500
index down0 and the Nasdaq composite index down 10, all very commissionable on heavy volume. Ford
loses 5.8 billion and must restate earnings back to year 2000 is a bullish sign
in the fraudulent
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $56; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-23-06) Waning full
Moon and lunatical suckers
bear market rally is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 114.54, Standard & Poor's 500
index up 8.42 and the Nasdaq composite index up 13.26, all very commissionable on heavy volume. Ford
loses 5.8 billion and must restate earnings back to year 2000 is a bullish sign
in the fraudulent
Skilling Sentenced to 24 Years in Prison
AP - Former Enron Chief Executive Officer Jeffrey Skilling,
the most vilified figure from the financial scandal of the decade, was
sentenced Monday to 24 years and four months in the harshest sentence yet in
the case that arose from the energy trading giant's collapse.
Oil
Prices Fall Below $59 a Barrel AP
Ford
Loses $5.8B in 3Q on Sagging Sales AP
AT&T
Earns $2.17B in 3Q to Surpass Views AP
Wal-Mart
to Slow Pace of Store Openings AP
After stumbling out of the gate amid
typical nervousness ahead of a two-day FOMC meeting, it didn't take long for
the market's underlying bullish tone to resurface and again sideline those
trying to fight the upward trend in equities, especially in large-cap names.Among the few catalysts providing a floor of buying
support Monday was another batch of better than expected earnings, renewed
optimism about Wal-Mart's growth strategy, and another decline in oil prices.The biggest name on today's calendar was AT&T (T
34.71 +0.27), whose 74% year/year earnings growth plays into Overweight rating
on Telecom and further supports another quarter of double-digit profit growth
for the S&P 500. Over 70% of the more than 150 S&P 500 companies
reporting quarterly results thus far have beaten expectations. That leaves
aggregate Q3 operating earnings on pace to rise about 18%, above the 14% gain
expected prior to the start of the earnings season.However,
the biggest news item among blue chips came from Wal-Mart (WMT 51.17 +1.80).
The retailer surged 3.7% to a new 52-week high after saying it will
significantly reduce capital expenditures to drive overall returns - an
initiative that should lead to improved profitability.Also
helping the Dow close at a new record high was General Motors (GM 35.06 +1.72).
The stock surged 5.7% to its best level in 12 months in anticipation it will
turn in a surprisingly strong report tomorrow following Ford Motor's (F 7.90
-0.11) widely expected disappointment this morning.The
other Dow component topping analysts' expectations today was American Express
(AXP 57.50 -0.54). The stock, which hit a 52-week high last
Wednesday, dropped 2.8% after Q3 revenues checked in lighter than
expected. AXP was one of only four Dow components to close lower. DJ30 +114.54
NASDAQ +13.26 SP500 +8.42 NASDAQ Dec/Adv/Vol
1520/1547/1.85 nlm NYSE Dec/Adv/Vol
1371/1875/1.53 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $56; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-20-06) Waning full
Moon and lunatical suckers
bear market rally into the close is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average down 9.36, Standard & Poor's 500
index up 1.64 and the Nasdaq composite index up 1.36, all very commissionable on heavy volume. Caterpillar relates the pervasive reality and the frauds on wallstreet intimidate same with sell off, ignoring pervasive options scandal/fraud and rallies Merck despite lower than expectation results.....riiiiight!. Election
year corporate welfare to prime the pump and the mock stock market with money
the nation doesn’t have (increasing already huge deficits). CPI figures (upon
which government inflation adjusted payment obligations are based) lower than
expected…..riiiiight! Intel earnings/revenues down
sharply but according to the lunatic frauds on wall street, beat expectations
and stock rallies along with yahoo which as in the pre-dot com bust days says
better days are a coming….. riiiiight
Core inflation rate which is closely watched by the Fed exceeds all
expectations. Fraud Merrill Lynch has really been pushing and commissioning
that worthless paper and reports record earnings, despite having produced
nothing and for very little if any value added (that ill-gotten money has to
come from somewhere-your pockets?). The big economic report awaiting scrutiny was the monthly trade deficit
which was expected to narrow but in fact INCREASED to 69.9 billion. The
Merck,
Schering-Plough Shares Climb AP
Caterpillar
Sharply Reduces Forecast AP
Google's
Stock Climbs to 9-Month High AP
Layoffs
Expected at Philly Newspapers AP
With the Dow closing at a new record for the ninth
time in two weeks, it wasn't surprising to see blue chips look fatigued
throughout most of the session Friday.What did surprise Wall Street, though,
was an earnings miss from one of the average's best performers.
Caterpillar (CAT 59.40 -9.62) had its worst day since the market crash on
October 19, 1987, plunging 14% after taking its Q3 misfortune a step further by
reducing its full-year EPS guidance and providing 2007 forecasts significantly
lower than analysts' estimates.While IBM (IBM 90.51 +0.65) was largely
responsible for lifting the Dow past 12,000 two days ago, Caterpillar was
largely responsible for erecting a wall of worry that left the Dow struggling
to close above its latest milestone. Caterpillar's sell-off had a 77-point
negative impact on the index. Fortunately for the bulls still confident that
the S&P index will rise at an even faster pace than earnings growth, Google
(GOOG 459.70 +33.64) handily beat expectations for the eighth time in nine
tries since going public. As the fourth most influential component on the
Nasdaq, Google's 8% advance eventually overshadowed declines in SanDisk (SNDK
49.14 -12.58) and Broadcom (BRCM 27.51 -1.46) and helped the tech-heavy Composite
eke out a gain. SanDisk was the day's worst performing S&P 500 component,
tumbling 20% after a larger than expected drop in average selling prices for
its flash chips contributed to a 4% year/year decline in Q3 profits. Broadcom
sold off after it lowered Q4 sales forecasts.When it was all said and done,
Google's report, coupled with better than expected Q3 earnings from Dow
components 3M Co. (MMM 78.33 +1.93) and Merck (MRK 45.54 +1.05), lent some
additional validation to the market's underlying bullish tone that has let
stocks run virtually unabated since bottoming out in mid July.Oil prices
closing at their lowest levels of the year provided some additional
reassurance. Crude for November delivery closed down 2.9% at $56.82/bbl as
traders priced in some uncertainty as to whether OPEC members will abide by
their plans to cut production by 1.2 mln barrels a day. However, with the
November contract expiring today, there was more open interest in the December
contract, which was off 1.9% at $59.35/bbl. DJ30 -9.36 NASDAQ +1.36 SP500 +1.64
NASDAQ Dec/Adv/Vol 1823/1204/1.91 bln NYSE Dec/Adv/Vol 1776/1446/1.61 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $56; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-19-06) Waning full
Moon and lunatical suckers
bear market rally is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 19.05, Standard & Poor's 500
index up 1 and the Nasdaq composite index up 3.79, all very commissionable on heavy volume. Election
year corporate welfare to prime the pump and the mock stock market with money
the nation doesn’t have (increasing already huge deficits). CPI figures (upon
which government inflation adjusted payment obligations are based) lower than
expected…..riiiiight! Intel earnings/revenues down
sharply but according to the lunatic frauds on wall street, beat expectations
and stock rallies along with yahoo which as in the pre-dot com bust days says
better days are a coming….. riiiiight
Core inflation rate which is closely watched by the Fed exceeds all
expectations. Fraud Merrill Lynch has really been pushing and commissioning
that worthless paper and reports record earnings, despite having produced
nothing and for very little if any value added (that ill-gotten money has to
come from somewhere-your pockets?). The big economic report awaiting scrutiny was the monthly trade deficit
which was expected to narrow but in fact INCREASED to 69.9 billion. The
Google's
3Q Profit Nearly Doubles
AP - Google Inc.'s third-quarter profit nearly doubled in the latest
demonstration of the Internet search leader's phenomenal financial firepower.
Dow
Gains 19, Reaches 12,000 Milestone AP
OPEC
Cuts Oil Production by 1.2M Barrels AP
Grasso
Ordered to Pay Back Up to $100M AP
Citigroup,
Bank of America Shares Tumble AP
For the second session in a row the Dow eclipsed the 12,000
level, but unlike yesterday, optimism on the earnings front fueled by another
batch of better than expected reports was enough to close the blue chip index
above its latest milestone. However, with a 13th consecutive quarter of double-digit
profit growth having already been priced into stocks, coupled with the cautious
tone that typically accompanies the start of earnings season, market gains were
minimal. A 1.5% rebound in oil prices was among the most noticeable excuses for
taking some money off the table and preventing a more convincing rally in
equities. After closing at their second lowest level this year,
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $58; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-18-06) Waning full
Moon and lunatical suckers
bear market rally is nothing less than a defacto
fraud by the lunatic frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial
average up 42.66, Standard & Poor's 500
index up 1 and the Nasdaq composite index down 7.80, all very commissionable on heavy volume. Election
year corporate welfare to prime the pump and the mock stock market with money
the nation doesn’t have (increasing already huge deficits). CPI figures (upon
which government inflation adjusted payment obligations are based) lower than
expected…..riiiiight! Intel earnings/revenues down
sharply but according to the lunatic frauds on wall street, beat expectations
and stock rallies along with yahoo which as in the pre-dot com bust days says
better days are a coming….. riiiiight
Core inflation rate which is closely watched by the Fed exceeds all
expectations. Fraud Merrill Lynch has really been pushing and commissioning
that worthless paper and reports record earnings, despite having produced
nothing and for very little if any value added (that ill-gotten money has to
come from somewhere-your pockets?). The big economic report awaiting scrutiny was the monthly trade deficit
which was expected to narrow but in fact INCREASED to 69.9 billion. The
Dow
Ends Up 43, but Closes Below 12,000
AP - The Dow Jones industrial average
briefly swept past 12,000 for the first time Wednesday, extending its march
into record territory as investors grow increasingly optimistic about corporate
earnings and the economy.
EBay
Beats Views As Profit Rises 10 Pct. AP
AMD
Earns 27 Cents Per Share in 3Q AP
AOL
Laying Off 1,300 in N.M., Ariz. AP
Consumer
Prices Dip, Core Inflation Up AP
It took all of about one minute
Wednesday for the Dow to garner the 50 points it needed to surpass the 12,000
level, as stocks got a big boost from Big Blue and a benign reading on inflation.Proving more difficult, though, was sustaining
such a gain as a wall of worry that stocks are overbought on a short-term basis
was erected almost as quickly as the milestone was attained. Add to that
volatile oil prices, relatively no validation in the bond market that core
inflation at the consumer level is well contained, and split sector leadership
and the bulls struggled to more convincingly keep the three-month rally intact.Since earnings reports from several tech bellwethers
the night before were mixed, investors initially waited for the September CPI
report to set a more definitive tone to trading since it typically provides a
helpful signal as to the direction of Fed policy. To the delight of the bulls,
core CPI rose just 0.2%, in line with economists' forecasts and offering some
relief following Tuesday's jarring headline increase on inflation at the
producer level. Even though today's CPI data left the core rate at a
decade-high 2.9% year/year, clearly higher than the Fed would like, the steady
dose of 0.2% gains for a third straight month confirmed that the recent uptrend
is moderating, easing the worst of inflation fears and providing further
evidence that the Fed may again forego a rate hike at next week's FOMC meeting.Meanwhile, International Business Machines (IBM
89.90 +2.95) opening up 4.1% at a new 52-week high after handily beating
analysts' forecasts was the biggest reason behind the Dow eclipsing 12,000.
Fellow Dow component Intel (INTC 21.16 +0.26), which also posted a better than
expected Q3 report Tuesday night, provided additional market support but only
managed to recoup a portion of the 3.3% sell-off in INTC shares that took a
toll on all three major averages a day earlier. In fact, a sell-off in
Semiconductor Equipment, today's second worst performing S&P industry group
(-4.8%), was largely responsible for removing some notable leadership in the
Tech sector. Novellus Systems (NVLS 26.45 -2.12) said Q3 profits tripled, but
issued downside Q4 revenue guidance, while Linear Technology (LLTC 30.54 -2.36)
posted a 13% rise in Q1 earnings but also said it sees weaker than expected
sales in its December quarter. Yahoo! (YHOO 22.95 -1.20) issuing downside Q4
revenue guidance and Motorola (MOT 23.70 -1.15) missing expectations on a 45%
year/year decline in Q3 earnings added insult to injury for a sector where we
believe valuations remain reasonable.The only Dow
component out with results today was JPMorgan Chase (JPM 47.13 -0.86), which
also topped Wall Street estimates and played into our Overweight rating on
Financials. However, company CEO Jamie Dimon again
warning that JPM was benefiting from an unusually favorable credit environment
that's not expected to continue prompted investors to consolidate gains that
lifted JPM shares to a 52-week high last Thursday.Fortunately
for the bulls, leadership in other influential sectors like Health Care and
Consumer Staples eventually helped to offset the lack of support from
Technology and the profit engine that continues to be Energy. Oil prices, which
were up earlier in the day following larger than expected declines in
distillate and gas supplies, closed down more than 2.0% and below $58/bbl a day
before tomorrow's emergency OPEC meeting.Since
packaging and transportation costs aren't likely to be as high as previously
forecast, and lower oil should improve the profit margin impact of
commodity-cost inflation, Consumer Staples continued to draw incremental relief
from a pullback in energy prices. Despite the sector's defensive
characteristics resonating with investors still questioning the pace of
economic growth, it was Health Care that was the day's best performing
sector as Johnson & Johnson (JNJ 68.15 +2.07) hit a new 52-week high after
Prudential raised its price target on the Dow component from $59 to $70. DJ30
+42.66 NASDAQ -7.90 SP500 +1.91 NASDAQ Dec/Adv/Vol
1568/1485/2.17 bln NYSE Dec/Adv/Vol
1432/1831/1.62 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $58; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-17-06)
suckers bear market rally into the close as stocks drop still only modestly
relative to reality as the wall street fraud continues to suck the suckers in; ie., as the Dow Jones industrial average fell 30.58, Standard
& Poor's 500 index down 5.00, and
the Nasdaq composite index down 18.89, all very commissionable on heavy volume.
Core
inflation rate which is closely watched by the Fed exceeds all expectations.
Fraud Merrill Lynch has really been pushing and commissioning that worthless
paper and reports record earnings, despite having produced nothing and for very
little if any value added (that ill-gotten money has to come from somewhere-your
pockets?). The big economic report awaiting scrutiny was the
monthly trade deficit which was expected to narrow but in fact INCREASED to
69.9 billion. The
Dow
Ends Down 31 on Jump in Inflation
AP - Wall Street retreated Tuesday from attempts to push the Dow Jones
industrial average to 12,000, rattled by unfavorable economic data and concerns
that earnings from technology companies will be disappointing.
IBM
Posts 5 Percent 3Q Revenue Gain AP
Intel
Beats Views Despite Declines AP
Yahoo
3Q Profit Slides on Slowing Growth AP
Judge
Vacates Conviction of Ken Lay AP
After getting within three points of
Dow 12,000 a day earlier, an added sense that stocks are overbought on a
short-term basis and ripe for some profit taking left sellers in control Tuesday,
snapping a three-day winning streak. As a reminder, the Dow had hit a record
high in seven of the last 10 sessions; all three major indices are up 3.3% on
average just two weeks into October. Given the more optimistic view on
inflation that has been priced into stocks of late, investors also erred to the
side of caution after a disappointing read on inflation at the producer level
cast a cloud of uncertainty over tomorrow's more influential CPI report. Total
PPI fell 1.3%, the biggest drop in three years due to a record 22.2% drop in
gas prices. However, the more closely watched core PPI rose a surprising 0.6%
(consensus 0.2%), ruffling the inflation hawks' feathers even though the PPI
data are much more volatile than CPI and the increase in auto and truck prices
responsible for the jump in core PPI may prove temporary.The
biggest thorn in the market's side was a 3.0% sell-off in Intel (INTC 20.96
-0.65). The Dow component, which is also the sixth most heavily weighted
component on the Nasdaq,
tumbled after Goldman Sachs downgraded the stock on valuation concerns and
noted that expectations heading into its Q3 report after the bell are too
aggressive. Worries that tech companies won't come through with decent enough
profit growth to justify current valuations overshadowed a plethora of better
than expected earnings reports, some M&A activity and a 1.7% sell-off in
oil prices. Dow component Johnson & Johnson (JNJ 66.07 +1.14) was the
biggest blue chip out with strong quarterly results, but its 1.7% surge struggled
to offset declines in 18 of the Dow's 30 components. To wit, United
Technologies (UTX 65.92 -0.87), the Dow's second worst performer today (-2.4%),
also topped forecasts and went a step further by raising its FY06 EPS outlook.
However, after opening very close to an all-time high, shareholders opted to
consolidate recent gains, which removed some leadership from the influential
Industrials sector. Merrill Lynch (MER 84.60 +0.49) was another notable name
exceeding Wall Street's expectations. The investment bank more than doubled Q3
net income, providing further evidence the S&P 500 will enjoy a 13th
straight quarter of double-digit profit growth and playing into our Overweight
rating on Financials. Nonetheless, the rate-sensitive financial sector still
ended lower on the day in spite falling bond yields and Chicago Mercantile
Exchange's (CME 516.01 +12.76) $8 bln bid for CBOT
Holdings (BOT 152.10 +17.59). DJ30 -30.58 NASDAQ -18.89 SP500 -5.00 NASDAQ
Dec/Adv/Vol 1926/1089/2.07 bln
NYSE Dec/Adv/Vol 2069/1212/1.36 bln
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $60; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-16-06) Waning full Moon and lunatical
suckers bear market rally is nothing less than a defacto fraud by the lunatic frauds on wall street
to suck the suckers in; ie.,
as the Dow Jones industrial average up 20.09,
Standard & Poor's 500 index up 3.43, and
the Nasdaq composite index
up 6.55, all
very commissionable on heavy volume. Election year corporate welfare to prime
the pump and the mock stock market with money the nation doesn’t have
(increasing already huge deficits). The big economic report awaiting scrutiny
was the monthly trade deficit which was expected to narrow but in fact
INCREASED to 69.9 billion. The
Dow
Ends Up 20 As It Nears 12,000 AP - Wall Street extended its record-
setting advance
Monday, sending the Dow Jones industrial average within a
whisper of 12,000
as investors grew more optimistic that corporate profits will
remain robust amid a
slowing economy.
Gas
Prices Fall to Lowest Level in '06 AP
UnitedHealth Shares Down As CEO Departs AP
Ex-FDA
Chief to Plead Guilty AP
Mattel
Posts 6 Pct. Rise in 3Q Profit AP
Stocks extended their winning streak
to three on Monday and, more notably, lifted the Dow to within 3 points of
12,000 before closing at another new all-time high of 11980.60. After stumbling
out of the gate on early profit taking efforts, it didn't take long for the
market's underlying bullish tone to resurface and again sideline those trying
to fight the upward trend in equities. Even though the Q3 earnings season is
not expected to begin in earnest until Tuesday, any evidence to support a 13th
straight quarter of double-digit profit growth for the S&P 500 kept
investors keyed in on the bottom line. Better than expected Q3 earnings from
Eaton (ETN 75.53 +5.23) and WW Grainger (GWW 72.70 +2.18), coupled with a
stronger than expected early read on October manufacturing conditions which
suggested the much desired soft landing remains on track, provided a floor of
support for the Industrials sector. Even the sector's transportation components
turned in notable performances despite dealing with a third consecutive rise in
oil prices. Directly benefiting from crude's 2.4% climb back toward $60/bbl was
the profit engine that is Energy - the day's best performing sector (+2.2%).
Crude oil was up in sympathy with cold weather in parts of the
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-13-06) Waning full Moon and lunatical suckers bear market
rally into the close is nothing less than a defacto fraud by the lunatic frauds on wall street
to suck the suckers in; ie.,
as the Dow Jones industrial average up 13,
Standard & Poor's 500 index up 2,
and the Nasdaq composite
index up 11, all
very commissionable on heavy volume. The big economic report awaiting scrutiny
was the monthly trade deficit which was expected to narrow but in fact
INCREASED to 69.9 billion. The
After logging a
third consecutive week of solid gains, blue chips looked tired throughout most
of the session Friday, as investors armed with an adequate Q3 report from the
oldest Dow component (GE) struggled with mixed economic data, a rebound in oil
and rising bond yields. Nonetheless, the underlying bullish tone that has
lifted the three major indices 2.4% on average just two weeks into the
fourth quarter eventually sidelined enough of the intraday inquiries
about the sustainability of a three-month rally in stocks to get the
Dow within reach of its next milestone -- 12,000.Only a day after a
handful of large-cap names helped paint a more optimistic picture of the Q3
earnings season, bellwether General Electric (GE 35.94 -0.28) was front and
center Friday. Even though the Dow component turned in a solid performance
overall, Q3 earnings that merely matched Wall Street expectations failed to
impress investors and left the market looking elsewhere for better growth
opportunities. To wit, the Dow still managed to close at another new all-time
high but that was largely due to strength among the Dow's tech components (e.g.
IBM +1.7% and HPQ +1.2%).Technology was one of only four sectors to close
higher. Fortunately for the bulls, leadership from the profit engine that is
Energy (+1.4%) eventually helped investors look past a 1.4% rise in oil prices
and the commodity's inflationary characteristics. While the energy sector isn't
expected to grow Q3 earnings as impressively as it did in Q2 (+44%),
anticipated profit growth of 23% should keep the S&P 500 on pace for a
13th consecutive quarter of double-digit profit growth.An afternoon turnaround
in Financials provided some added leadership that eventually carried a positive
underlying tone into the close. Led by continued momentum in brokerage stocks,
the rate-sensitive sector was also able to shrug off a rise in bond yields
after Regions Financial (RF 38.79 +0.79) posting a 37% year/year rise in Q3
earnings provided more evidence that the S&P 500 will keep its streak of at
least 10% operating EPS growth intact.Treasuries sold off, lifting the yield on
the 10-year note to a three-week high (4.80%) after economic data showed a
stronger than expected rise in consumer sentiment and what eventually turned
out to be decent retail sales report. Before the bell, the Commerce Dept.
showed that September retail sales unexpectedly fell 0.4% while sales,
excluding autos, fell 0.5%, the biggest drop in three years. That initially
raised some concerns about the health of the consumer. However, further
analysis showed that the drop in total retail sales was caused by a record 9.3%
plunge in gasoline sales, which is actually good for the economy and not a sign
of consumer weakness. DJ30 +12.81 NASDAQ +11.11 SP500 +2.79 NASDAQ Dec/Adv/Vol
1175/1849/1.95 bln NYSE Dec/Adv/Vol 1351/1898/1.44 bln
Up
13, Dow Sets Another Record Close
AP - The Dow Jones
industrial average inched to another record close Friday, marking the third
straight week of triple-digit increases in the blue chip index.
Jury:
Wal-Mart to Pay Workers $78M-Plus AP
Oil
Prices Rise Above $58 a Barrel AP
Retail
Sales Fall; Inventories Rise AP
FCC
Delays Vote on AT&T-BellSouth Deal AP
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $58; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-12-06) Waning full Moon and lunatical suckers bear market
rally into the close is nothing less than a defacto fraud by the lunatic frauds on wall street
to suck the suckers in; ie.,
as the Dow Jones industrial average up 95.57,
Standard & Poor's 500 index up 12.88,
and the Nasdaq composite
index up 37.91, all
very commissionable on heavy volume. The big economic report awaiting scrutiny
was the monthly trade deficit which was expected to narrow but in fact
INCREASED to 69.9 billion. The
Stocks rallied across the board
Thursday as investors embraced a much improved earnings picture and more
evidence the economy is on track for the Fed's much-desired soft landing. The
Dow Jones Industrial Average closed at another new record and came within
striking distance of hitting 12,000 while the Nasdaq
turned in an even stronger performance (+1.6%). With regard to the tech-heavy
Composite's impressive performance, it was actually a discounter -- Costco
Wholesale (COST 53.93 +3.86) -- that provided the biggest spark of bargain
hunting interest on this year's poorest performing index among the majors.
Costco soared nearly 8% after it topped Wall Street's expectations and
forecasted 15-19% profit growth for fiscal 2007. Also keeping the Consumer
Staples sector in focus was PepsiCo (PEP 62.92 -0.94). That company
posted a 71% jump in Q3 earnings and boosted its full-year outlook. Its
encouraging report reinforced our Moderately Bullish market view and kept the
S&P 500 on pace for a 13th straight quarter of double-digit profit growth.
However, with PepsiCo up 9.2% in Q3 and hitting an all-time high on September
27th in anticipation of a strong quarter, the stock sold off as did a lot of
other defensive names as investors rotated into more growth-oriented areas. To
wit, Technology was the most influential leader of the 10 sectors closing to
the upside. Renewed enthusiasm for beaten-down chip stocks coupled with
continued momentum in the Nasdaq's
most influential component and the fifth most heavily-weighted constituent on
the S&P 500 -- Microsoft (MSFT 28.22 +0.68) -- were among the biggest
reasons behind broad-based strength on all three indices. Also helping the Dow
eclipse the psychological 11,900 barrier for the first time ever was McDonald's
(MCD 42.39 +1.14), a suggested holding in Briefing.com's
Active Portfolio. The stock surged nearly 3% to a multi-year high after
boosting its Q3 EPS outlook following better than expected Sep. same-store
sales. Lending further credence behind our recent upgrade of the Consumer
Discretionary sector to Market Weight was a better than expected Q3 report and
raised FY06 guidance from Yum! Brands (YUM 59.07 +4.50),
which turned in the day's best performance (+8.3%) on the S&P 500.
Finally, if a handful of better than expected earnings news across a wide array
of industry groups wasn't enough to keep the Q3 rally intact, the Fed's Beige
Book provided the ideal perspective on economic conditions that has been priced
into equities over the last couple of months. Even amid "widespread
cooling" in the housing market, the roadmap to the next Fed meeting (Oct.
24-25) showed that most districts reported "few signs of increased pricing
pressure," while it was also noted that "wage growth around the
nation was generally modest," "consumer spending increased more
quickly" and that "manufacturing activity remained generally strong
in most Districts." DJ30 +95.57 NASDAQ +37.91 SP500 +12.88 NASDAQ Dec/Adv/Vol 715/2329/2.03bln NYSE Dec/Adv/Vol
689/2581/1.55bln
Wal-Mart
Faces at Least $62M in Damages
AP - A state jury found Thursday that
Wal-Mart broke Pennsylvania labor laws by forcing employees to work through
rest breaks and off the clock, a decision plaintiffs' lawyers said would result
in at least $62 million in damages.
Dow
Up 96 to Close at Record 11,948 AP
McDonald's
Stock Upgraded on 3Q Forecast AP
PepsiCo
3Q Profit Soars, but stock down as Costs Rise AP
Fed
Finds Cooling in Housing Market AP
(10-11-06)Stocks drop still only modestly relative to reality as the wall street fraud continues to suck the suckers in; ie., as the Dow Jones industrial average fell 15.04 , Standard & Poor's 500 index down 3.47, and the Nasdaq composite index down 7.16, all very commissionable on heavy volume. The Fed Chairman said there is a
"substantial correction" in housing, which will probably shave about
1% off growth in the second half of the year. The
Aside from another
pullback in oil prices, investors found little to get excited about Wednesday,
as some disappointments on the earnings front kicked off the Q3 reporting
season on a sour note as did more of a hawkish interpretation of the FOMC
Minutes. Before the market even opened, the underlying tone was bearish after
Alcoa (AA 26.85 -1.44) officially kicked thing off a night earlier by badly
missing Wall Street's forecasts. Sure, the Dow component reported a solid 86%
year/year profit improvement to keep the S&P 500 on pace for a 13th
consecutive quarter of double-digit profit growth and lend support to our
Moderately Bullish market view; but the huge seventeen cent miss left investors
questioning the sustainability of the recent rally, especially with the Dow
closing at a new all-time highs a day earlier. Also taking a toll on sentiment
and the Materials sector was Monsanto (MON 43.49 -2.92), which matched
expectations but raised concerns about slowing profit growth after it issued
downside FY07 EPS guidance. The absence of leadership in Energy also stalled
some of the recent momentum seen in blue chips. Crude oil futures extended
Tuesday's 2.4% slide with a 1.5% decline, closing at a new 2006 low near
$57.50/bbl. Even though a "considerably lower level of energy prices of
recent weeks, if sustained, would help reduce overall inflation and damp
increases in core prices," as was stated in today's FOMC minutes, further
deterioration in oil renewed doubts about the Energy sector's ability to keep
generating record earnings. Albeit indicating that "real GDP growth would
continue to slow into the second half of 2006," offering further evidence
the Fed will remain on hold, "before strengthening gradually
thereafter," the FOMC minutes also noted that members "continued to
see a substantial risk that inflation would not decline as anticipated."
Unfortunately for the stock market bulls still reaping the benefits of falling
Treasury yields, Fed officials saying they're still "quite concerned"
about inflation left bond traders less convinced of a possible Fed easing,
which has been priced into the Treasury market over the last couple of months,
resulting in more consolidation and a subsequent rise in interest rates.
As if a rise in borrowing costs weren't already a concern for rate-sensitive
Financials, the sector was dealt an extra blow after asset manager Legg Mason
(LM 87.02 -18.29) warned that Q2 earnings will fall well short of expectations.
Investment Banks (-1.1%) were another sore spot as online brokers like E*Trade
(ET 22.31 -2.15) and Charles Schwab (SCHW 17.20 -0.86) sold off amid reports
that Bank of
Dow
Ends Down 15 on Alcoa Profit Report
AP - Stocks pulled back Wednesday
after aluminum producer Alcoa Inc. kicked off earnings season with a
weaker-than-expected profit report and minutes from the Federal Reserve's last
meeting stoked concerns about the economy.
AT&T-BellSouth
Deal to Help Company AP
CEOs
Swept Out by Stock Options Scandal AP
Visa
to Restructure, Be Publicly Traded AP
Skilling Asks Judge to Throw Out Verdict AP
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-10-06) Waning full Moon and lunatical suckers bear market
rally into the close is nothing less than a defacto fraud by the lunatic frauds on wall street
to suck the suckers in; ie.,
as the Dow Jones industrial average up 9,
Standard & Poor's 500 index up 2, and
the Nasdaq composite index
up 3, all
very commissionable on heavy volume. The Fed Chairman said there is a
"substantial correction" in housing, which will probably shave about
1% off growth in the second half of the year. The
Even though the Dow closed at a new
all-time high, there was little conviction on the part
of buyers Tuesday as the major averages struggled to stay in the
green going into the close. With Dow component Alcoa (AA 28.29 +0.30) slated to
officially kick off earnings season after the close, investors waiting to see
how corporate profits fared in Q3 amid slowing economic growth did just that --
wait -- as participants weighed some encouraging corporate news and plunging
oil prices against rising Treasury yields. Bond traders coming back from a
three-day weekend in profit taking mode, pushing the 10-year note down 13 ticks
and lifting the yield to a three-week high of 4.74%, added to the sense of
reserve among equity traders who have been pricing in the value of future
earnings based on lower interest rates. Still gradually re-calibrating
expectations for Fed policy, Treasuries fell for a third straight day amid less
evidence of a Fed easing after Dallas Fed President Richard Fisher warned that
policy makers may need to raise interest rates further if the inflationary
pressures don't ease. Fortunately for the bulls eventually getting in the last
word, a 2.4% sell-off in oil prices below $59/bbl, without sacrificing anything
in the way of leadership from an Energy sector that is expected to see Q3
earnings grow 25%, provided a big source of market support. Analyst upgrades on
oil explorers
Alcoa
3Q Profit Jumps 86 Pct. on Demand
AP - Alcoa Inc.'s earnings soared 86
percent as demand from makers of aircraft, trucks and trains outweighed lower
metal prices and a seasonal lull, the aluminum maker said Tuesday. But the
results fell far short of Wall Street expectations.
Sovereign
Bancorp Board Discusses CEO AP
Dow
Ends Up 9 in Its Fourth Record Close AP
Three
in HP Scandal Plead Not Guilty AP
Genentech
Profits Surge AP
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-9-06) Waning full Moon and lunatical suckers bear market
rally into the close is nothing less than a defacto fraud by the lunatic frauds on wall street
to suck the suckers in; ie.,
as the Dow Jones industrial average up 7,
Standard & Poor's 500 index up 1, and
the Nasdaq composite index
up 11, all
very commissionable on heavy volume. The Fed Chairman said there is a
"substantial correction" in housing, which will probably shave about
1% off growth in the second half of the year. The
Stocks got back on the buying track Monday, but with the
bond market closed in observance of the Columbus Day holiday, limited
participation from equity traders indicated there was little
conviction behind the market's modest move to the upside. Kicking off a new
week of trading, but with a sense of caution and an early excuse to lock in
recent market gains, were reports that North Korea had detonated its
first-ever nuclear weapon. However, since there was little evidence to confirm
such a weapons test, what few participants decided not to take a long weekend
found a few, primarily positive news items to digest. As evidenced by the
tech-heavy Nasdaq turning in
the best performance among the majors, a 2.0% surge in the Composite's fourth
most influential component -- Google (GOOG 429.00 +8.50) -- was a big
reason behind the Nasdaq extending two consecutive
weeks of 1.8% gains. Google inked a video content deal with Warner Music Group
(WMG 26.77 -0.06) and is reportedly in talks to acquire YouTube
for $1.65 bln. Active Portfolio holding Cisco Systems
(CSCO 24.31 +0.22) hitting a new 52-week high after a favorable mention in this
week's Barron's, as well as leadership in semiconductors fueled by renewed
speculation that Intel (INTC 20.62 -0.01) may acquire Nvidia
Corp. (NVDA 32.92 +1.99), provided additional support. Of the other seven
sectors trading higher, Materials paced the way as investors eyed steel stocks
as potential takeover candidates. The sector was also in focus in
anticipation of Alcoa (AA 27.99 +0.25) officially kicking off a Q3
earnings season tomorrow that is expected to show
operating profit growth for the S&P 500 of around 14%. Such optimism
on the earnings front was also responsible for continued momentum in the
Financials sector. The latter is positioned to be one of the largest
contributors to aggregate EPS growth on the S&P 500 and, due to further
recognition that the Fed's tightening activity is reaching an end, underpins
our Moderately Bullish market view. Consumer Discretionary also provided some
notable leadership as a $7.9 bln offer from the Dolan
family to take Cablevision Systems (CVC 26.50 +2.57) private spoke to the
underlying value of cable companies, especially rival Comcast Corp. (CMCSA
37.67 +0.54). The sector got an extra lift from the retail group after oil
prices erased almost all of a 2.6% intraday gain. At around 1:00 ET, crude oil
futures were as high as $61.30/bbl (+$1.54) after OPEC reportedly said Saudi
Arabia and five other members will cut production to help offset a more than
20% pullback in prices from their record levels in July. However, the commodity
and its inflationary characteristics came tumbling
down almost as fast as they spiked 30 minutes earlier to close below $60/bbl
following reports that OPEC President Daukoru will
not hold an emergency meeting to officially ratify an agreement to cut output.
Since everything from explorers to refiners are also expected to keep the
S&P 500 on track to achieve a 13th straight quarter of double-digit profit
growth, the absence of leadership from the Energy sector kept blue-chip gains
at a minimum. DJ30 +7.60 NASDAQ +11.78 SOX +1.1% SP500 +1.08 NASDAQ Dec/Adv/Vol 1203/1809/1.51 bln NYSE
Dec/Adv/Vol 1284/1938/1.24 bln
Google
Snaps Up YouTube for $1.65B AP - Google Inc. is snapping up YouTube Inc. for $1.65 billion in a deal that catapults the
Internet search leader to a starring role in the online video revolution.
Dow Ends Up 8, Nasdaq Gains 12 AP
Airbus CEO Resigns, Successor Named AP
Oil
Prices Settle at $59.96 a Barrel AP
Fiorina Still Puzzled by Ouster at HP AP
AP - Internet search leader
Google Inc. is in talks to acquire the popular online video site YouTube Inc.
for about $1.6 billion in cash and stock, according to published reports.
Kerkorian
Ally Resigns From GM Board AP
Goodyear
Strikers Determined on Demands AP
Illegal
Immigrants Sue Wendy's AP
Group
Plans to Liquidate Tower Records AP
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-6-06) Full moon and suckers bear market rally into the close as stocks drop still only modestly relative to reality as the wall street fraud continues to suck the suckers in; ie., as the Dow Jones industrial average fell 16, Standard & Poor's 500 index down 3.64 , and the Nasdaq composite index down 6, all very commissionable on heavy volume. The Fed
Chairman said there is a "substantial correction" in housing, which
will probably shave about 1% off growth in the second half of the year. The
Institute of Supply Management said its services index fell to 52.9 in
September -- the lowest level since April 2003. Great News….. riiiiight!..... Consumer Confidence Higher Than Expected... riiiiight!..... and housing starts were down sharply but
not-as-bad-as-expectations game in play US
Existing Home Sales Fall 0.5% in August; Sales Price Drops Existing-home
prices fall for 1st time in 11 years along with fed jaw-boning pre-election
that inflation has been licked .....riiiiight …..despite printing worthless dollars like they’re going out of
style because they really are! Fed did nothing and stocks rallied, pre-election.....riiiiight!
What about the reality of u.s. debt service at a record unsustainable $2
billion per day on a revolving $2 trillion charge account with ie., China, etc.. The fact that foreclosures are up and that
there is projected new trade deficit record, fake government inflation numbers
for election year purposes, housing starts down 6% means little to the alice-in-wonderland lunatic frauds of wall
street and the so-called pundits including yahoo below. Almost all
computerized volume is and must be considered heavy, manipulated, economically
wasteful volume [stocks move contrary to rational analytical facts (ie., exceeded lowered expectations, things so bad interest
rates can’t rise, exceeded expectations, no earnings but outlook extraordinary,
the fed says booo as they print more worthless
dollars to finance deficits, etc. ) is money in the
bank for the frauds on wall street when they unwind said irrational positions
]. Philadelphia Federal Reserve announces that its broadest measure of
manufacturing activity fell to a negative reading for the first time since
April 2003, leading economic indicators fall .2%, and previously fell .1% though expected to show an increase, and in addition
to the larger than expected 4.1% drop in July existing home sales to its lowest
level in over two years and lifted inventories to record levels , new home
sales fell 4.3%, and a larger than expected 2.4% decline in July durable orders
which are negatives anywhere but in the alice-in-wonderland
lunatic world of wall street where same is greeted as good news as also follows
with b.s.
from Yahoo:
The
September employment report was the market's focal point on Friday and what it
saw didn't generate too much concern. Granted a lower than expected
increase of 51K in nonfarm payrolls was disappointing in its own right, but
when coupled with the sharp upward revision to August payrolls (to 188K
from 128K), it conveyed a message that the labor market is still solid and that
the Fed will again refrain from raising interest rates at this month's FOMC
meeting. Overall, it was a fairly neutral report. The market's
performance suggested as much, as the indices suffered only modest losses
despite being up big for the week entering Friday's session. From a corporate
standpoint, the big item of the day was an early-afternoon report that Kirk
Kerkorian's Tracinda Corp. had indicated it won't pursue the purchase of an
additional 12 million shares of General Motors' (GM 31.05, -2.08) stock after
the auto maker terminated its alliance discussions with Renault and
Nissan. In addition, it was noted that Kerkorian's lieutenant Jerome York
resigned from GM's board. The aforementiond news triggered a knee-jerk dip in
the indices that carried them to session lows, but they soon bounced back in a
reflectection of the market's underlying bullish bias. The Treasury market, on
the other hand, didn't have any bounce today as it sold off hard in the wake of
the employment report. The explanation for the weak showing was tied to a
feeling of disappointment that the upward revision to nonfarm payroll
employment suggested an easing from the Fed was likely to happen
later rather than sooner. The benchmark 10-year note fell 23 ticks, bringing
its yield up to 4.69%. The jump in Treasury rates acted as an impeding
factor for stocks, which started the day in negative territory and stayed their
until the closing bell. The Nasdaq for its part came within a tenth of a
point of turning positive before it got met with profit-taking resistance. There
wasn't any strong leadership on the day, which was evident in the fact that no
economic sector moved more than 1.00%. Materials (+0.51%), telecom
services (+0.20%), and energy (+0.15%) were the only sectors that ended higher;
meanwhile, the influential financial sector (-0.40%) underperformed in
conjunction with the spike in market rates. Held back by General Motors,
the auto group was the worst-performing industry in the SandP 500.
Another notable laggard was the drug retail group, which got clipped
further on reports that a potential legal settlement might lead to lower
prescription drug pricing. That's good news for consumers, but not
for the drug retailers' earnings prospects. As a reminder, the Treasury market
will be closed on Monday in observance of Columbus Day, but the stock market
will be open for a full day of trading. Next week also will mark the
start of the third quarter earnings reporting period when Alcoa (AA 27.74,
+0.17) reports its results after the close on Tuesday.DJ30 -16.48 NASDAQ -6.35
SP500 -3.64 NASDAQ Dec/Adv/Vol 1720/1291/1.69 bln NYSE Dec/Adv/Vol
2090/1134/1.50 bln
AP - Internet search leader
Google Inc. is in talks to acquire the popular online video site YouTube Inc.
for about $1.6 billion in cash and stock, according to published reports.
Kerkorian
Ally Resigns From GM Board AP
Goodyear
Strikers Determined on Demands AP
Illegal
Immigrants Sue Wendy's AP
Group
Plans to Liquidate Tower Records AP
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government numbers said total PPI rose a
smaller than expected 0.1% (consensus 0.4%) in July, which was well below the
0.5% jump in June, while the more closely watched core rate (ex-food and
energy) unexpectedly (RIIIIIGHT!) fell 0.3% (consensus +0.2%) -- the first
decline since October and the largest drop since a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C..
Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger, AP Economics Writer,
previously wrote,” U.S. Trade Deficit Falls 0.3 Percent in June to $64.8B,
Offsetting Jump in Chinese Imports. Dell
Recall Stems From sony Production Flaw
WASHINGTON (AP) -- America's trade deficit showed a slight improvement
as strong global growth pushed U.S. exports to a record level. That helped
offset a surge in Chinese imports and record crude oil prices. The deficit
declined 0.3 percent in June, compared with May, dropping to $64.8 billion,
still the fifth largest imbalance on record, the Commerce Department reported
Thursday. The deficit is running at an annual rate of $768 billion through the
first six months of this year, putting the country on track to see a fifth
straight record imbalance. Last year's deficit was $716.7 billion. Prior
considerations remain apposite in this clearly overvalued market. The frauds on
wall street feel compelled to continue their tradition/superstition/fraud
tactic of buying on the rumor and selling on the news (fact) of the Fed’s
temporary pause in rate hikes. You see, the facts/news do not rationally
warrant holding dollar based securities/stocks but provide a means to scam the
stupid money, to the benefit of the wall street frauds/scammers and smart
money. Yahoo previously commented: Friday
was a wild day on Wall Street with early gains fueled by an encouraging July
jobs report being wiped away as the return of concern tied to an economic
slowdown outweighed the potential of a pause in tightening at Tuesday's Fed
meeting. Before the bell, nonfarm payrolls rose a less than expected 113,000
and the unemployment rate rose for the first time since November, suggesting
the labor market is losing steam and reinforcing the view that the economy is
on track for a soft landing. To wit, fed funds futures were pricing in a 44%
chance....., to which I responded, Wild..... I’ll give you wild: GM says their
quarterly loss was $3.4 billion and not 3.2 billion as reported; Ford says
their loss was $200 million dollars more than they previously reported and will
now join gm in worker buyouts; but both GM and Ford will now offer built-in
ipods which should substantially help their core business of building cars;
meanwhile, options/accounting scandal/subterfuge occurring at the apple ipod
(anything but computers) company. Analyst says GM good news now behind it
(past/discounted), yet stock still rose upon said analysis …..riiiiight…..
daaaaah! Apple Computer Inc. warned Thursday that it may have to revise its
profits dating back to 2002 in a worsening stock option scandal, maybe even
suspension, that has cast a harsh light on Silicon Valley's compensation
practices. Don’t forget that GDP growth slowed substantially and below
expectations at 2.5% which in the alice-in-wonderland lunatic world of wall
street is of course good news. Stagflation? The fact is that no rational
investor would choose dollar based stocks/securities when they could get less
risky/liquid (approx.) 5% yielding cds, money market instruments, short-term
treasuries/funds, etc.. However it’s not rational investors that are racking up
commission dollars trading in and out of stocks like termites eating away at
the huge capital funds which they control. Nothing constituting real value
would account for the fraudulent rally mode this and other days. Highly
leveraged obfuscating mergers/acquisitions, also very commissionable
(investment bankers/brokers), and historically have more often than not ended
quite badly; oil prices now above $59; yes, as in the last crash, they will get
fooled again’ as stocks up sharply in the fraudulent alice-in-wonderland
lunatic world of wall street where down is up and up is down. The stock market
has never been so backward-looking. Indeed, amazingly, the pundits/analysts are
even talking SEASONAL considerations in their fraud in the inducement which is
the height of absurdity (such things are discounted well in advance in a
rational market). The once objective, fact-oriented Barrons publication has now
become a shill for the continuing fraud on wall street. Bush no conservative
says Buckley (who also says that in Europe bush’s failed war policies would
have required his expected resignation).....daaaaah!; neither are the
hillbillies clintons and papa hillbilly bush. CNN's DOBBS BLASTS U.S. ISRAEL POLICY... BUCHANAN: 'Israel policy violates international law, is
un-American and un-Christian'... The government is also catching on
and playing the “better than expectations” game with the still very substantial
deficit numbers, clouded by the use of social security funds used in the
general fund rather than allocated for the defacto bankrupt social security
system where they belong. ! Remember, leading economic indicators are down .6
percent continuing an ignored (by wall street frauds) downward trend/weakness
extending back to the summer, 2005. Options scandal as was inherent in the
(fraudulent) dotcom bust is extent and under way in nasdaq particularly. Spotlight
on the Stock Option Scandal-The share prices of
companies involved in stock options backdating have held up well compared to
the broader market. But shareholders might be in for a rougher ride. Plus, why
the Nasdaq has its hands full. I previously warned be very skeptical of up-coming
government/corporate/collaborative/wall street data inasmuch as they are quite
desperate and have proven [ie., illegal Iraq war/occupation, 911 attack(for the
neocon contrived pearl harbor effect)/who ordered NORAD to stand down?/who were
the pre911(within days) short-sellers?/the twin towers
implosion, the missile that hit the pentagon precisely in the area that
housed the army investigators who announced days before the opening of an
investigation into a substantial pentagon fraud, etc.] that the truth is no
obstacle when falsity is expedient and the lunatic frauds on wall street will
try to tell you what’s up is down and what’s down is up. Lou Dobbs gets paid a
lot of money to keep track of such things and doubts the verity of the
government numbers. He is riiiiight! The catch-22 is that the defacto bankrupt
u.s. is printing worthless paper (so much so that they’ve stopped reporting M3)
and borrowing beyond sustainability, which is hyperinflationary despite false
government numbers (ie., core inflation number to fraudulently decrease yield
to ibond holders, etc.). Higher interest rates to prop worthless dollar and
finance deficits inevitable despite wishin', hopin', and lyin’ to the contrary;
foreclosures up, housing down, default notices up 67% (particularly in
california, ie., orange, la, ventura, counties etc.) nationwide. Don’t forget:
the equity in housing has been stripped out of real estate by way of the
refinancing boom, which artificially stimulated the economic numbers while
ultimately leaving buyers with debt exceeding actual property values. There is
substantial downside bias in light of real economic considerations,
particularly beyond the moment/trading day given that this bull (s**t) cycle in
this indisputable secular bear market is over. Remember: more contrived
wasteful commissions to the wall street frauds, the level and percentage of
which should be examined in light of computerization and decreased costs
attendant to same especially since only A Small Fraction Of What wall street
Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is
Tantamount To A (Economically) "Wasteful Tax" (On The Economy) via
'churn and earn' computerized programmed trades.
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed: 14/07/2006)
|
The United States is heading for bankruptcy, according to
an extraordinary paper published by one of the key members of the country's
central bank. |
A ballooning budget deficit and a pensions and welfare
timebomb could send the economic superpower into insolvency, according to
research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St
Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is
already bankrupt. "To paraphrase the Oxford English Dictionary, is the
United States at the end of its resources, exhausted, stripped bare, destitute,
bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,"
he asked.
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the US is not massive. The Bush
administration this week cut its forecasts for the fiscal shortfall this year
by almost a third, saying it will come in at 2.3pc of gross domestic product.
This is smaller than most European countries - including the UK - which have
deficits north of 3pc of GDP.
Prof Kotlikoff, who teaches at Boston University, says:
"The proper way to consider a country's solvency is to examine the
lifetime fiscal burdens facing current and future generations. If these burdens
exceed the resources of those generations, get close to doing so, or simply get
so high as to preclude their full collection, the country's policy will be
unsustainable and can constitute or lead to national bankruptcy.
"Does the United States fit this bill? No one knows
for sure, but there are strong reasons to believe the United States may be
going broke."
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a study
by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise for
the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This figure is more than five
times US GDP and almost twice the size of national wealth. One way to wrap
one's head around $65.9trillion is to ask what fiscal adjustments are needed to
eliminate this red hole. The answers are terrifying. One solution is an
immediate and permanent doubling of personal and corporate income taxes.
Another is an immediate and permanent two-thirds cut in Social Security and
Medicare benefits. A third alternative, were it feasible, would be to
immediately and permanently cut all federal discretionary spending by
143pc."
The scenario has serious implications for the dollar. If
investors lose confidence in the US's future, and suspect the country may at some
point allow inflation to erode away its debts, they may reduce their holdings
of US Treasury bonds.
Prof Kotlikoff said: "The United States has
experienced high rates of inflation in the past and appears to be running the
same type of fiscal policies that engendered hyperinflations in 20 countries
over the past century."
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch 12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word: on Friday night, the
Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average
recommended stock market exposure among a subset of short-term market timing
newsletters tracked by the Hulbert Financial Digest, stood at plus-23.8%. This
was certainly below the 31.4% it showed on Tuesday night, when Mark Hulbert
worried, presciently we must say, that it was too strong from a contrary
opinion point of view. But it's still above its 12.6% reading at end of June,
although, Mark pointed out, the stock market had declined in the interim. And
since Mark wrote, the Dow Jones Industrial Average has had three triple-digit
down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some crash-type
action." But, perhaps significantly, Russell did not quite hit the panic
button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic -- just down, down, and
down. The key consideration here is that there is still no sign of big money
coming into this market. In fact, the big money has been leaving this market
all year. ... The longer the market continues down without a panic decline, the
worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled
Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the 1929 Wall Street Crash. He explained: One morning, I was on the way
to my office and stopped to have my shoes polished. The guy asked my advice
about the shares he bought. If people with this kind of talent were now playing
the market, I knew there was something wrong.....
U.S. Treasury balances at Fed fell on July
17Tue Jul 18, 2006
WASHINGTON, July 18 (Reuters) - U.S.
Treasury balances at the Federal Reserve, based on the Treasury Department's
latest budget statement (billions of dollars, except where noted):
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit
8,311.633 8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts
A. Gary Shilling, Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been fueled by a
declining savings rate and increased borrowing. The savings rate of American
consumers has fallen from 12% in the early 1980s to -1.7% today (see chart
below). This means that, on average, consumer spending has risen about a half
percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of their after-tax
income is only half the profligate consumer story. If someone borrows to buy a
car, his savings rate declines because his outlays go up but his disposable
income doesn’t. So the downward march in the personal savings rate is closely
linked to the upward march in total consumer debt (mortgage, credit card, auto,
etc.) in relation to disposable income (see chart below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide
refinancings and home equity loans, Americans extracted $719 billion in cash
from their houses last year after a $633 billion withdrawal in 2004, according
to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on U.S. consumers to buy
the excess goods and services for which they have no other markets.
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by individuals
are in conservative hands. Life insurance reserves can be borrowed, but their
total size, $1.1 trillion, pales in comparison to the $1.8 trillion that
homeowners extracted from their houses in the 2003-2005 years. There’s $6.7
trillion of equity in noncorporate business, but the vast majority of that is
needed by typically cash-poor small businesses to keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s, totaled $2.5
trillion in 2004 and have been growing rapidly because employers favor them.
But sadly, many employees, especially those at lower income levels, don’t share
their bosses’ zeal. Only about 70% participate in their company 401(k) plans
and thereby take advantage of company contributions. Lower paid employees are
especially absent from participation, with 40% of those making less than
$20,000 contributing (60% of those earning $20,000 to $40,000), while 90% of
employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years
old are subject to a 10% penalty, with income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house prices about to be, no other sources, such as inheritance or pension fund withdrawals, are likely to fill the gap between robust consumer spending and weak income growth. Consumer retrenchment and the saving spree I’ve been expecting may finally be about to commence. And the effects on consumer behavior, especially on borrowing and discretionary spending, will be broad and deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
August 27, 2006 NYTimes By GRETCHEN MORGENSONThe boom in corporate mergers is creating concern that illicit trading
ahead of deal announcements is becoming a systemic problem.
(10-5-06) Full Moon and lunatical suckers bear market rally is nothing less than a defacto fraud by the lunatic
frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial average up 16, Standard & Poor's 500 index up 3, and the Nasdaq composite index up 15, all very commissionable on heavy volume. The Fed
Chairman said there is a "substantial correction" in housing, which
will probably shave about 1% off growth in the second half of the year. The
For a third straight day, the Dow closed at another new record
high. This time around, though, investors had to look past the usual suspects
-- energy prices and interest rates -- to keep the upward momentum intact since
both oil and borrowing costs were on the rise. Instead, today's buying efforts
were fueled by further evidence that consumer spending remains healthy, as
better than expected September same-store sales from 70% of the retailers out
with monthly comps, according to Retail Metrics, exacerbated the underlying
sense of bullishness in the market. Last night, Starbucks (SBUX 38.59 +2.63)
kicked things off with a stronger than expected 6.0% rise in September comps
and followed that with news this morning of an accelerated expansion plan that
will double the company's size by 2010. As the Nasdaq's tenth most influential component, the 7.4%
surge in Starbucks was a big reason behind the tech-heavy Composite's ability
to extend yesterday's impressive 2.1% rally. Some profit taking in
semiconductors and hardware prevented the Technology sector from offering any
upside leadership.The most notable retailer exceeding
analysts' expectations due to favorable weather conditions, lower gas prices
and back-to-school momentum, though, was Target (TGT 58.55 +0.92). Its
good news stood in contrast to rival Wal-Mart (WMT 48.33 -1.22), which posted a
meager 1.3% gain in September same-store sales. Target said September comps
rose 6.7% (Briefing.com consensus +5.2%), prompting management to say Q3 EPS
will also be better than expected. Crude oil prices were up as much as 2.6%
near $61/bbl on reports, which were eventually denied, that OPEC
agreed to its first production cut in nearly two years. Oil prices
eventually drifted back and closed just above $60 per barrel. Nonetheless,
subsequent leadership in the Energy sector, coupled with Energy Secretary Bodman saying that oil at $60/bbl is still profitable for
producers, helped reinforce the belief that the S&P 500 will see a 13th
straight quarter of double-digit profit growth. Separately, some hawkish
commentary from
Dunn
Appears in Court Over HP Spy Probe
AP - Ousted
Hewlett-Packard Co. Chairwoman Patricia Dunn surrendered to authorities
Thursday, a day after she and four others were charged in HP's
ill-fated investigation to ferret out the source of boardroom leaks.
Dow
Hits 3rd Straight Record Close AP
Steelworkers
Strike 16 Goodyear Plants AP
Delta,
Retirees Reach Benefit Deal AP
Wal-Mart
Expands Generic Drug Plan AP
There
is nothing to rationally justify the previous up move or mixed results in the
market other than what is tantamount to a negative, and based upon spurious
data from the government; ie., fake government
numbers said total PPI rose a smaller than expected 0.1% (consensus 0.4%) in
July, which was well below the 0.5% jump in June, while the more closely
watched core rate (ex-food and energy) unexpectedly (RIIIIIGHT!) fell 0.3%
(consensus +0.2%) -- the first decline since October and the largest drop since
a 0.5% decline in April 2003. Home Sales Decline in 28 States, D.C.. Real estate prices down/stagnant. But housing stocks…..up.....riiiiight!.....in the fraudulent "alice-in-wonderland"
lunatic world of wall street where down is up and up is down. Martin Crutsinger,
AP Economics Writer, previously wrote,”
US '.....going
bankrupt'
By Edmund Conway,
Economics Editor (Filed:
|
The |
A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into
insolvency, according to research by Professor Laurence Kotlikoff
for the Federal Reserve Bank of
Prof Kotlikoff said that, by some
measures, the
According to his central analysis, "the US government
is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who,
in this context, are current and future generations to whom it has explicitly
or implicitly promised future net payments of various kinds''.
The budget deficit in the
Prof Kotlikoff, who teaches at
"Does the
Experts have calculated that the country's long-term
"fiscal gap" between all future government spending and all future
receipts will widen immensely as the Baby Boomer generation retires, and as the
amount the state will have to spend on healthcare and pensions soars. The total
fiscal gap could be an almost incomprehensible $65.9 trillion, according to a
study by Professors Gokhale and Smetters.
The figure is massive because President George W Bush has
made major tax cuts in recent years, and because the bill for Medicare, which
provides health insurance for the elderly, and Medicaid, which does likewise
for the poor, will increase greatly due to demographics.
Prof Kotlikoff said: "This
figure is more than five times
The scenario has serious implications for the dollar. If
investors lose confidence in the
Prof Kotlikoff said: "The
UPDATE - Two former NYSE
traders found guilty of fraud
Stock market staggers, but investors still may be too
optimistic
Commentary: Newsletters react to
stock markets' losing week
By Peter Brimelow,
MarketWatch
12:04 AM ET Jul 17, 2006
Investors may still be too optimistic
NEW YORK (MarketWatch) -- First, a proprietary word:
on Friday night, the Hulbert Stock Newsletter Sentiment Index (HSNSI), which
reflects the average recommended stock market exposure among a subset of
short-term market timing newsletters tracked by the Hulbert Financial Digest,
stood at plus-23.8%. This was certainly below the 31.4% it showed on Tuesday
night, when Mark Hulbert worried, presciently we must say, that it was too
strong from a contrary opinion point of view. But it's still above its 12.6% reading
at end of June, although, Mark pointed out, the stock market had declined in
the interim. And since Mark wrote, the Dow Jones Industrial Average has had
three triple-digit down days.
Not
good.
Dow
Theory Letters' Richard Russell wrote Friday morning: "If the Dow breaks
support at 10,760, I think we could have some nasty action, even some
crash-type action." But, perhaps significantly, Russell did not quite hit
the panic button when the Dow did indeed close at 10,739 Friday night.
He simply
remarked, supporting the contrary opinion view: "Three days in a row with
the Dow down over 100 points each day -- you don't see that very often. But
still no signs of real fear, no capitulation, no panic
-- just down, down, and down. The key consideration here is that there is still
no sign of big money coming into this market. In fact, the big money has been
leaving this market all year. ... The longer the market continues down without
a panic decline, the worse the ultimate panic will be when it arrives."
What is Wrong with the Stock Market?
Dr. Khaled Batarfi
John D.
Rockefeller was once asked why he decided to sell all his stocks just months
before the
July 17 July 14 (respectively)
Fed acct 4.087 4.935
Tax/loan note acct
10.502 10.155
Cash balance 14.589
15.192
National debt,
subject to limit 8,311.633
8,323.084
The statutory debt limit
is $8.965 trillion.
The Treasury said there were $192 million in individual tax refunds and $23 million in corporate tax refunds issued.
End Of The Bubble Bailouts A. Gary Shilling,
Insight 08.29.06 - For a quarter-century, Americans’ spending binge has been
fueled by a declining savings rate and increased borrowing. The savings rate of
American consumers has fallen from 12% in the early 1980s to -1.7% today (see
chart below). This means that, on average, consumer spending has risen about a
half percentage point more than disposable, or after-tax, income per year for a
quarter-century.
The fact that Americans are saving less and less of
their after-tax income is only half the profligate consumer story.
If someone borrows to buy a car, his savings rate declines because his outlays
go up but his disposable income doesn’t. So the downward march in the personal
savings rate is closely linked to the upward march in total consumer debt
(mortgage, credit card, auto, etc.) in relation to disposable income (see chart
below).
Robust consumer spending was fueled first by the soaring stock market of
the 1990s and, more recently, by the housing bubble, as house prices departed
from their normal close link to the Consumer Price Index (see chart below) and
subsequently racked up huge appreciation for homeowners, who continued to save
less and spend more. Thanks to accommodative lenders eager to provide refinancings and home equity loans, Americans extracted
$719 billion in cash from their houses last year after a $633 billion
withdrawal in 2004, according to the Federal Reserve.
But the housing bubble is deflating rapidly. I expect at least a 20%
decline in median single-family house prices nationwide, and that number may be
way understated. A bursting of the bubble would force many homeowners to curb
their outlays in order to close the gaps between their income and spending
growth. That would surely precipitate a major recession that would become
global, given the dependence of most foreign countries on
That is, unless another source of money can bridge the gap
between consumer incomes and outlays, just as house appreciation seamlessly
took over when stocks nosedived. What could that big new source of money be?
And would it be available soon, given the likelihood that house prices will
swoon in coming quarters?
One possible source of big, although not immediate, money to sustain
consumer spending is inheritance. Some estimates in the 1990s had the postwar
babies, who have saved little for their retirement, inheriting between $10
trillion and $41 trillion from their parents in the coming decades. But
subsequent work by AARP, using the Federal Reserve’s Survey of Consumer
Finances for 2004 and previous years, slashed the total for inheritances of all
people alive today to $12 trillion in 2005 dollars. Most of it, $9.2 trillion,
will go to pre-boomers born before 1946, only $2.1 trillion to the postwar
babies born between 1946 and 1964, and $0.7 trillion to the post-boomers.
Furthermore, the value of all previous inheritances as reported in the
2004 survey was $49,902 on average, with $70,317 for pre-boomers, $48,768 for
boomers and $24,348 for post-boomers. Clearly, these are not numbers that
provide for comfortable retirements and, therefore, allow people to continue to
spend like drunken sailors.
What other assets could consumers borrow against or liquidate to support
spending growth in the future? After all, they do have a lot of net worth,
almost $54 trillion for households and nonprofit organizations as of the end of
the first quarter. Nevertheless, there aren’t any other big assets left to tap.
Another big stock bonanza is unlikely for decades, and the real estate bubble
is deflating.
Deposits total $6.3 trillion, but the majority, $4.9 trillion worth, is
in time and savings deposits, largely held for retirement by financially
conservative people. Is it likely that a speculator who owns five houses has
sizable time deposits to fall back on? Households and nonprofits hold $3.2
trillion in bonds and other credit market instruments, but most owned by
individuals are in conservative hands. Life insurance reserves can be borrowed,
but their total size, $1.1 trillion, pales in comparison to the $1.8 trillion
that homeowners extracted from their houses in the 2003-2005 years. There’s
$6.7 trillion of equity in noncorporate business, but
the vast majority of that is needed by typically cash-poor small businesses to
keep their doors open.
Pension funds might be a source of cash for consumers who want to live it
up now and take the Scarlett O’Hara, “I’ll worry about that tomorrow” attitude
toward retirement. They totaled $11.1 trillion in the first quarter, but that
number includes public funds and private defined benefit plans that are seldom
available to pre-retirees unless they leave their jobs.
The private defined contribution plans, typically 401(k)s,
totaled $2.5 trillion in 2004 and have been growing rapidly because employers
favor them. But sadly, many employees, especially those at lower income levels,
don’t share their bosses’ zeal. Only about 70% participate in their company
401(k) plans and thereby take advantage of company contributions. Lower paid
employees are especially absent from participation, with 40% of those making
less than $20,000 contributing (60% of those earning $20,000 to $40,000), while
90% of employees earning $100,000 or more participate.
Furthermore, the amount that employees could net from withdrawals from
defined contribution plans would be far less than the $2.5 trillion total,
probably less than the $1.8 trillion they pulled out of their houses from 2003
to 2005. That $2.5 trillion total includes company contributions that are not
yet vested and can’t be withdrawn. Also, withdrawals by those under 59½ years old are subject to a 10% penalty, with
income taxes due on the remainder.
With soaring stock portfolios now ancient history and leaping house
prices about to be, no other sources, such as inheritance or pension fund
withdrawals, are likely to fill the gap between robust consumer spending and
weak income growth. Consumer retrenchment and the saving spree I’ve been
expecting may finally be about to commence. And the effects on consumer
behavior, especially on borrowing and discretionary spending, will be broad and
deep.
WHISPERS
OF MERGERS SET OFF BOUTS OF SUSPICIOUS TRADING...
(10-4-06) Full Moon and lunatical suckers bear market rally is nothing less than a defacto fraud by the lunatic
frauds on wall street to suck the suckers in; ie., as the Dow Jones industrial average up 123.27, Standard & Poor's 500 index up 16.11, and the Nasdaq composite index up 47.30, all very commissionable on heavy volume. The Fed
Chairman said there is a "substantial correction" in housing, which
will probably shave about 1% off growth in the second half of the year. The
(7-1-05) Oil prices heading back up- market rallies -lunatic frauds on wall street continue suckers bear market bounce.....riiiiight! (6-29-05) Government public sentiment polls substantially exceed all estimates.....You can believe the criminal u.s. gov't, as the lunatic frauds on wall street "window dress" the quarter in suckers bear market short-covering rally.....riiiiight! (6-23,20-05) Full Moon In the fraudulent alice-in-wonderland criminal american world of wall street and criminal american gov. says "oil inventories fell less than expected", riiiiight, as the Lunatic Frauds on Wall Street are in "Summer Ralley Mode" - It's their right to have a "suckers' Bear Market Summer Ralley ! Wall street frauds are people too and a full moon's just around the corner, as they "ralley toward the close" on record oil prices and greater than expected drop in the leading indicators (.5%). Leading Indicators Down for fifth month in a row.. Oil sets new record at $59.37/barrel. This bull cycle in this secular bear market is effectively over. Suckers' bear market short-covering "rally" at best......Reality-The Lunatic Frauds on wall street are "running on fumes"(of the deficit-building election year overspending/temporary stimulus), fraud and B**l S**t. Only A Small Fraction Of What wall street Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is Tantamount To A (Economically) "Wasteful Tax" (On The Economy) [In The Form Of Huge Computerized, Computer-Driven, Programmed Trades/Swings, Generating Their Huge Windfall "Churn-and-Earn" Commission Dollars] (6-13,14,15,16,17-05) Ditto! Oil sets new record above $58
Prices extend week-long rally; strong demand shows no sign of letting up despite soaring costs.
June 17, 2005. Record quarterly trade/current accounts deficit. The Philadelphia Federal Reserve bank said its business activity index slumped to minus 2.2 in June from 7.3 in May, the index's first negative reading in 25 months. One analyst objectively states that they(the frauds on wall street) ignore the bad news and overeact (exuberantly) to the upside on even marginally good news. Only in the fraudulent alice-in-wonderland criminal american world of wall street is a substantial drop in retail sales a substantial positive/excuse for stocks to rise. I guess the wall street lunatics think other nations will buy (ultimately) worthless criminal u.s. paper for no yield at all! (6-9-05)(monthly) Trade Deficit up 6.3% to 56 billion ("less than expectations"....riiiiight!),Oil Prices up, unemployment claims down (holiday shortened week is the reason), Smart Money Index (not a contrarian indicator) regarding (big money) investor confidence drops to 48 from 66, Rosiest economic picture from Greenspan since his "envy of all the world" speech that preceded prior market bust, "FROTHEY" housing bubble ......riiiiight! (6-1,2,3-05) Talking market up/jawboning defying rational foecasts/estimates/reality-you can believe the criminal u.s. gov't........Riiiiight! ...... Manufacturing Growth Slower than forecast/Oil Prices Up (5-26-05)Frauds on Wall Street in "Summer Ralley Mode" - It's their right to have a "suckers' Bear Market Summer Ralley based on fraudulent/'false gov. data (5-19-05) Leading Indicators Down for fourth month in a row.. (4-29-05) Leading indicators down. Durable goods orders down. Unemployment Up (then there's those "uncounted millions" who've just stopped looking)! Wait one minute. Some false government data (like the WMD's in Iraq) to the suckers' market rescue: oil inventories up 5.4 million barrels ........Riiiiight! "They beat (lowered) expectations", time/reason to rally........Riiiiight! This bull cycle in this secular bear market is effectively over. Suckers' bear market short-covering "rally" at best......Reality-The Lunatic Frauds on wall street are "running on fumes"(of the deficit-building election year overspending/temporary stimulus), fraud and B**l S**t. Only A Small Fraction Of What wall street Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is Tantamount To A (Economically) "Wasteful Tax" (On The Economy) [In The Form Of Huge Computerized, Computer-Driven, Programmed Trades/Swings, Generating Their Huge Windfall "Churn-and-Earn" Commission Dollars](4-28-05) Dumbya bush reminds all that, "he's not an economist, accountant, lawyer, etc.", but don't sweat the details, the realities. What is bush? bush is STUPID! bush is a WAR CRIMINAL! bush is BURNT OUT! bush is a LIAR! bush is INCOMPETENT! Social Security is
The "Idea" Of Social Security Privatization Is As Dumb as DUMBYA'S Error/War In Iraq - The "Lock Box/Funded/Non-Stock Market" Approach Would Be Best (government bonds could be used since if worthless, social security won't much matter). A "Means Test" Would Be Consistent With The "Social Insurance" Goal And The Maintenance of Demand (and Consumption); An Economic Safety Net For Some, So To Speak, And Consistent With Macroeconomic Goals. Some Serious Actuarial Work Will All But Eliminate The "Uncertainty" Most Assuredly Engendered By The Fraudulent World of wall street In Which "Bail Outs" As Have Already Occurred Though Little Publicized Would With Near Certainty Occur On A Grand Scale. (5-26-05)Frauds on Wall Street in "Summer Ralley Mode" - It's their right to have a "suckers' Summer Ralley based on fraudulent/'false gov. data (5-19-05) Leading Indicators Down for fourth month in a row. (5-18-05) More Gov't. Numbers/Statistics (favorably) exceed private estimates (re: trade deficit, oil/gas/gasoline inventories, etc.,5-13-05-retail sales)........Riiiiight! Mobster trump to come out of latest bankruptcy scam/fraud. Obfuscating mergers. Largest (UAL) pension default in history (more to follow). Wait one minute. Some false government data (like the WMD's in Iraq) to the fraudulent market rescue. "Suck them In"! "They beat (lowered) expectations", time/reason to rally........Riiiiight! This bull cycle in this secular bear market is effectively over. Suckers' bear market short-covering "rally" at best......Reality-The Lunatic Frauds on wall street are "running on fumes", fraud and B**l S**t. (5-17-05) Fed/administration "jawbones" the market up with ooooooohhh.... such tough talk, ie., they'll huff and puff and blow the juan down (or up?). (5-16-05) Confidence Down, but wall street Confidence game (fraud) Up. N.Y. Manufacturing Down 11%, to the wall street frauds that implies things looking up........Riiiiight! More Gov't. Numbers/Statistics (favorably) exceed private estimates (re: trade deficit, oil/gas/gasoline inventories, etc.,5-13-05-retail sales)........Riiiiight! Mobster trump to come out of latest bankruptcy scam/fraud. Obfuscating mergers. Largest (UAL) pension default in history (more to follow). Wait one minute. Some false government data (like the WMD's in Iraq) to the fraudulent market rescue. "Suck them In"! "They beat (lowered) expectations", time/reason to rally........Riiiiight! This bull cycle in this secular bear market is effectively over. Suckers' bear market short-covering "rally" at best......Reality-The Lunatic Frauds on wall street are "running on fumes", fraud and B**l S**t. More Gov't. Numbers/Statistics (favorably)exceed private estimates (re: trade deficit, oil/gas/gasoline inventories, etc.)........Riiiiight! Mobster trump to come out of latest bankruptcy scam/fraud. Obfuscating mergers. Largest (UAL) pension default in history (more to follow). Wait one minute. Some false government data (like the WMD's in Iraq) to the fraudulent market rescue. "Suck them In"! Gov't. labor stats exceed all private estimates substantially (274,000 vs. 174,000)........Riiiiight! bush and greenspan against raising FDIC/SIPC coverage/limits saying the expense when failures occur too great. At least their plugged in to what smart money already knows in this "1929-style" economy. Who's going to buy the lyin' criminal american "paper"? GM Vehicle Sales Down 7.7%. Ford's down 5.1%. Kooky Kirk Kerkorian to the Rescue? Whose Rescue? Current Shareholders who want to sell. GM worth more in parts (sale) than whole, with tougher times ahead. Government says gas inventories up ........Riiiiight! Fed Looks to 30 year bonds to finance runaway deficits. Higher interest rates (need to finance huge deficits). Leading indicators down. Durable goods orders down. Obfuscating mergers. Wait one minute. Some false government data (like the WMD's in Iraq) to the suckers' market rescue: oil inventories up 5.4 million barrels ........Riiiiight! "They beat (lowered) expectations", time/reason to rally........Riiiiight! This bull cycle in this secular bear market is effectively over. Suckers' bear market short-covering "rally" at best......Reality-The Lunatic Frauds on wall street are "running on fumes", fraud and B**l S**t. Factory production down. Oil prices up (then down, then up-China,India, etc.). Only A Small Fraction Of What wall street Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is Tantamount To A (Economically) "Wasteful Tax" (On The Economy) [In The Form Of Huge Computerized, Computer-Driven, Programmed Trades/Swings, Generating Their Huge Windfall "Churn-and-Earn" Commission Dollars]. (5-2-05)Leading indicators down. Durable goods orders down. Wait one minute. Some false government data (like the WMD's in Iraq) to the suckers' market rescue: oil inventories up 5.4 million barrels ........Riiiiight! "They beat (lowered) expectations", time/reason to rally........Riiiiight! This bull cycle in this secular bear market is effectively over. Suckers' bear market short-covering "rally" at best......Reality-The Lunatic Frauds on wall street are "running on fumes", fraud and B**l S**t. Factory production down. Oil prices up. Only A Small Fraction Of What wall street Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is Tantamount To A (Economically) "Wasteful Tax" (On The Economy) [In The Form Of Huge Computerized, Computer-Driven, Programmed Trades/Swings, Generating Their Huge Windfall "Churn-and-Earn" Commission Dollars] (4-29-05) Leading indicators down. Durable goods orders down. Unemployment Up (then there's those "uncounted millions" who've just stopped looking)! Wait one minute. Some false government data (like the WMD's in Iraq) to the suckers' market rescue: oil inventories up 5.4 million barrels ........Riiiiight! "They beat (lowered) expectations", time/reason to rally........Riiiiight! This bull cycle in this secular bear market is effectively over. Suckers' bear market short-covering "rally" at best......Reality-The Lunatic Frauds on wall street are "running on fumes"(of the deficit-building election year overspending/temporary stimulus), fraud and B**l S**t. Only A Small Fraction Of What wall street Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is Tantamount To A (Economically) "Wasteful Tax" (On The Economy) [In The Form Of Huge Computerized, Computer-Driven, Programmed Trades/Swings, Generating Their Huge Windfall "Churn-and-Earn" Commission Dollars] (4-27-05) Waning full moon. Leading indicators down. Durable goods orders down (2.8%). Wait one minute. Some false government data (like the WMD's in Iraq) to the suckers' market rescue: oil inventories up 5.4 million barrels ........Riiiiight! "They beat (lowered) expectations", time/reason to rally........Riiiiight! This bull cycle in this secular bear market is effectively over. Suckers' bear market short-covering "rally" at best......Reality-The Lunatic Frauds on wall street are "running on fumes"(of the deficit-building election year overspending/temporary stimulus), fraud and B**l S**t. Only A Small Fraction Of What wall street Does Is A Net Positive For The Economy (New Investment Capital), The Rest Is Tantamount To A (Economically) "Wasteful Tax" (On The Economy) [In The Form Of Huge Computerized, Computer-Driven, Programmed Trades/Swings, Generating Their Huge Windfall "Churn-and-Earn" Commission Dollars]At best, it was the "deficit-expanding" purchases courtesy of the lying incompetent federal government (bad economics).
The "Idea" Of Social Security Privatization Is As DUMB As The Error/War In Iraq - The "Lock Box/Funded/Non-Stock Market" Approach Would Be Best (government bonds could be used since if worthless, social security won't much matter).