Dow 2006

Racer said:
More bad news for the market to go up on.....
Oil back over $71 this afternoon and Gold just shy of $700 !
Looks like the market is anticipating that the FOMC commentary, alongside tomorrows 25pt rate hike, will indicate a subsequent pause.
 
Mind Games

kriesau said:
White House Calls Iranian Letter a Ploy
Officials say the missive, apparently the first between the nations' leaders since 1979, fails to address U.S. concerns over nuclear program.
By Maggie Farley and Paul Richter, Times Staff Writers. May 9, 2006

UNITED NATIONS — Iranian President Mahmoud Ahmadinejad sent an unexpected letter to President Bush on Monday, in what was seen as an overture for direct talks about Tehran's nuclear program, but U.S. officials dismissed the missive as an eleventh-hour ploy to forestall punitive action by the United Nations. The letter is thought to be the first direct communication between the two countries' leaders since Iranian militants overthrew the shah and took Americans hostage at the U.S. Embassy in 1979. Diplomats hoped the letter signaled a new willingness on Iran's part to address the standoff over its uraniumenrichment program, which the Islamic Republic says is for peaceful energy purposes, but which much of the West suspects is a cover for trying to build nuclear weapons.

Secretary of State Condoleezza Rice said that the letter did not contain serious proposals on the disputed nuclear program, but covered history, philosophy and religion. The missive also contained a litany of grievances and a demand to be treated as an international power, U.S. officials said. Bush, traveling to Florida, was briefed on the letter's contents. "It does not appear to do anything to address the nuclear concerns" of the international community, White House Press Secretary Scott McClellan told reporters on Air Force One. As Rice prepared to meet counterparts from Britain, China, France, Germany, Russia and the European Union on Monday night about how to deal with Iran's refusal to stop its nuclear activities, U.S. officials said they didn't even want to talk about talking to Iran.

"We don't have anything to say to Iran until they give up their pursuit of nuclear weapons," said John R. Bolton, the U.S. ambassador to the U.N. But Iran's approach may add to mounting pressure on Bush from U.S. allies and some Congress members to engage in direct talks with Tehran before resorting to sanctions or military action. The Security Council this week is considering a resolution that would pave the way for sanctions or military action if Iran fails to halt nuclear activities. Russia and China, which have veto power on the council, say that they are worried about Iran's intentions, but believe there is time for a diplomatic solution before reaching for harsher measures. China said Monday that it would not support any language that included military action.

"The U.S. is thinking we should exhaust the stick before we try the carrot, and the international community is thinking we should exhaust the carrot before we try the stick," said Karim Sadjadpour, an analyst for the International Crisis Group think tank in Washington. The prevailing attitude in Washington, Sadjadpour said, is: "Why should we reward Iran's bad behavior by talking to it when we haven't in the past? It would be conferring legitimacy on the regime. And why reward them for things they should be doing anyway?"

For months, European leaders have quietly pressed the Bush administration to join multilateral talks with the Iranians. "The only way out is for the two directly involved countries to talk to each other," said a senior non-Western official in Vienna who has been following negotiations closely. "Without this, some kind of direct discussion between the two, this issue is not going to get resolved "The idea of direct talks has circulated in Washington for some time, with pressure mounting in recent weeks. Over the weekend, Sen. John McCain (R-Ariz.) said talks should be considered, joining a chorus that includes Sen. Richard G. Lugar (R-Ind.), chairman of the Senate Foreign Relations Committee, and other leading figures of both parties. Mohamed ElBaradei, head of the International Atomic Energy Agency, has also called for direct talks. The Russians and Chinese are considered to be in favor of the idea, along with the British, Germans and French, to varying degrees.

The U. S . is moving more than 50% of it's troops from the 2 big bases in Japan !
This is the biggest movement of troops from Japan since the second world war
WHY ?
regards
 
twiggytwo said:
The U. S . is moving more than 50% of it's troops from the 2 big bases in Japan !
This is the biggest movement of troops from Japan since the second world war
WHY ?
regards
What is your source for this information ?
 
Yet more corrections to data!

The US Labor Department reported yesterday that the May 4 Q1 productivity data required corrections, though overall numbers related to non-farm productivity & unit labor costs remained unchanged. Specifically, Q1 hourly compensation in the manufacturing sector rose at a 2.4% rate rather than 1.5% while unit labor costs within that sector fell -1.7% & not -2.6% as previously reported. (Reuters)
 
Mind Games Cnbc

kriesau said:
Hi TT - I can't see any reference to this on CNBC - can you please post a link to the news item !



hI IT WAS ON CNBC YESTERDAY MORNING ABOUT 9-15 AM ( MONDAY 8TH )
sorry no link
regards
 
The last bear just roared - so should we start running for cover?
Some fear it spells disaster, but the former Cassandra defends his conversion

Larry Elliott, economics editor
Saturday May 6, 2006
The Guardian

Three months ago when the global business elite gathered in the Swiss ski resort of Davos for the World Economic Forum, they were greeted by the regular blast of doom and gloom from Stephen Roach. Morgan Stanley's chief economist had become known as the bear's bear, the analyst who could always find a cloud to any silver lining. Roach could always be relied on to prophesy that the imbalances in the global economy would end in tears. Until now.

Last week, markets were taken aback when Cassandra suddenly cheered up. "I am feeling better about the prognosis for the world economy for the first time in ages," Roach said in a piece of research entitled "World on the Mend". Taken aback, and a tad alarmed. Market folklore has it that the time to sell is when the last bear stops roaring. The reasoning is that once everybody believes things can only get better, markets become gripped by a herd mentality, lose touch with reality and eventually come down with a bump. Roach is clearly irritated by this kind of talk. "I can't get into that 'last bear growling' stuff," he said this week. He made the same call back in 1999 when there was fear of a market meltdown in the aftermath of the Russian debt default and the collapse of the hedge fund Long-Term Capital Management. "I went out on a limb but the world economy came back," he said.

Even so, it's not hard to see why Roach's conversion to the belief that global imbalances can be sorted out without large-scale disruption has caused a stir. Markets have been in a bullish, even euphoric, mood. The three-year plunge in equities which embraced the dotcom bust, the 9/11 attacks and the corporate scandals at Enron and WorldCom has been followed by a three-year climb. The FTSE 100 has risen by almost 25% over the past 12 months to its highest level in five years.

Until recently, the rise in shares was matched by an even more spectacular rise in government bonds, as investors took the view that sustained, non-inflationary growth would be the norm in a globalised world. Gilt yields, which move inversely to gilt prices, fell to their lowest level in 50 years. Commodity markets have told a similar story. The price of gold is at its highest level since the early 1980s, while silver has doubled in price over the past 12 months. In the world of fine art, a reasonable barometer of the frothiness of financial markets, a painting by Picasso was sold for $95.2m (£51m) in New York on Wednesday - the second highest amount ever paid for a painting.

These are just the kind of developments that Roach would have cited in Davos as signs of a tempest to come. So what has changed in the past 100 days? "I haven't changed the way I look at the world in any way," he said. "If anything, the imbalances in the world economy have gotten worse over the last several months. But that's been a good thing, because it has elicited a response from the powers that be that it's an urgent problem that needs addressing."

The moment Roach became more upbeat about the future, he said, was when the finance ministers and central bank governors of the G7 - the United States, Britain, France, Germany, Japan, Canada and Italy - met in Washington a fortnight ago. In addition to the usual communique after the talks, the G7 appended an annexe detailing problems that needed fixing in the global economy. A day later, the IMF was given the task of conducting wide-ranging surveillance of the global economy with a view to coming up with a menu of policy advice for the US, Europe and Asia. Boiled down to its bare components, the problem has been that America has been consuming too much while Europe and Asia have been consuming too little. The US has run up a trade deficit worth 7% of its GDP, and has been allowed to do so because central banks in Asia have been willing to buy US assets in return.

Roach's fear has been that at some point America's creditors would balk at the size of the current account deficit and stop buying US assets, triggering a run on the dollar so pronounced it would bring global financial markets and the world economy down with it. It is a prospect that still worries him. "That's a horrible scenario. But it's bad enough that the world collectively is now going to alter its game plan and respond to it. That's what I wanted all along. What really worried me was that the imbalances were mutating and nobody seemed to care." With oil prices above $70 a barrel and Iran thumbing its nose at the world with its nuclear programme, Roach now wants to see words matched with action. If they are not, the Davos great and good will find next January that the superbear has only been hibernating.

Before: "The mood in Europe is as bleak as I've ever seen it".

After: "I am feeling better about the prognosis for the world economy for the first time in ages"
 
So that time has come round again. Will the FOMC drop the "some further policy firming may be needed" and come up with something else? The problem I am beginning to have with the Bernanke chap, is that, he seems a little too easy to understand. With Greenspan using "constructive obsfucation" the market had to pause to digest what was said.

For what its worth I think that the phrase will be dropped but something else will be said about being vigilant on inflationary pressures. One wonders how the market will react to a phrase like
"there will be a temporary pause in tightening in order to assess inflationary pressures"?

My guess is that we will see a rally on the Dow to near the 10722 level then a fall back.

Anyone else want to guess? (could prove a lot cheaper than trading the move)
 
macbonzo said:
So that time has come round again. Will the FOMC drop the "some further policy firming may be needed" and come up with something else? The problem I am beginning to have with the Bernanke chap, is that, he seems a little too easy to understand. With Greenspan using "constructive obsfucation" the market had to pause to digest what was said.

For what its worth I think that the phrase will be dropped but something else will be said about being vigilant on inflationary pressures. One wonders how the market will react to a phrase like
"there will be a temporary pause in tightening in order to assess inflationary pressures"?

My guess is that we will see a rally on the Dow to near the 10722 level then a fall back.

Anyone else want to guess? (could prove a lot cheaper than trading the move)

Hi Mac

they will not be dropping that further policy firming from their statement, and i doubt they use the word pause either...

they might say we are moving to neutral....but in the scheme of things they are very dependent on future eco reports and as well they should be

i think they met their target of 5.00%, so we'll see...
 
Hi Jerry,

How are you?

I was just speculating

You made an excellent call on both the Dow and Crude last week. Are you looking at shorts yet on Dow?
 
macbonzo said:
Hi Jerry,

How are you?

I was just speculating

You made an excellent call on both the Dow and Crude last week. Are you looking at shorts yet on Dow?

Good Mac and you?

I think the DJIA is overbought here and due for a pullback to buy...what ever the outcome today and whatever the pullback is for the next 2-3 days or so, i will be dip buying no matter what till i see the whites of their eyes...................... :rolleyes:
 
"Some further policy firming may yet be needed to address inflation risks," the FOMC said. The previous statement hadn't included the word "yet.
 
Isn't it great, the markets go mad over the word "yet". Reminds me of Rolf Harris, "Can you see what it is yet?" :)
 
Dow up 23pts as I write. Thats my Short punched, kicked and well and truly beaten.

Now where did I put my hanky!

Any chance of a reversal?


UK
 
Bigbusiness said:
Isn't it great, the markets go mad over the word "yet". Reminds me of Rolf Harris, "Can you see what it is yet?" :)

Oh, but it is an important word. It suggests that they may be done tightening. It creates a probable chance that nothing will happen in June.

What was interesting was the market's initial reaction. It sold off. I must say, to me, the statement should have been viewed positively pretty well immediately. Still just demonstrates the fickle nature of the beast.
 
After hours

American International Group (AIG :

(66.54, +0.33, +0.5% ) lost 3.8% at $64. The insurance giant said that first-quarter net income came in at $3.2 billion, or $1.22 a share, down 16% from a year earlier when it made $3.8 billion or $1.45 a share. Excluding net realized investment gains and losses and certain accounting changes, AIG made $3.38 billion, or $1.29 a share, up from $3.23 billion or $1.23 a share, last year.
Analysts expected AIG to earn $1.36 a share in the period.
 
Mixed Signals From the Fed not What the Market Wanted

Briefing.com-- The stock market did not get the indication it wanted from the Fed that the interest rate hikes are finished with the announced hike in the fed funds rate to 5% this afternoon.

To some extent, this is partly because suggestions that the Fed might "pause" in its current rate hike cycle were taken to mean that the Fed would raise rates today and then be done. The hopes were that if the Fed indicated it would not raise rates at the June 29 meeting, that time would allow the previous rate hikes to slow the economy and thus eliminate the need for further hikes in the second half of the year. Today's policy statement does not support that conclusion.

The statement says the committee believes "some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook."

This leaves open the possibility that the Fed will pause at the next meeting, or even that the rate hikes are done (if economic growth slows appreciably). It also, however, leaves open the possibility of two or even more rate hikes. The use of the word "extent" implies that there certainly could be more than one more rate hike.

The question now is whether the incoming data will warrant further rate hikes. If economic growth continues strong, further rate hikes are likely. If inflation picks up much at all, rate hikes will be almost certain. If economic growth slows, however, and inflation remains contained, this could possibly be the final rate hike.

The key point for the stock market today is that there was no clear sign that the Fed will pause at the next meeting. The statement isn't bearish, but the lack of the bullish sentiment that was hoped for is disappointing. Our view is that the economic momentum will remain strong, and that 5% is not the top in this rate cycle.
 
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