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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
| |||||||||||||||||||||
|
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 soari
