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B4 The Bell, Tuezelday, June 29


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#1 Hiding Bear

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Posted 29 June 2004 - 07:05 AM

:D Welcome to B4 The Bell! :D


T Bill rates up to 1.35% this morning, making a 1.25% fed fund rates a certainty.

Machinehead said yesterday:

Looks like word's out on the Street -- Mad Al's quarter-point turd dropping WILL be viewed as a positive. Make it happen, boyz! The spin will be: "Well it could have been worse. He could have raised a HALF. So this painless little quarter-point mosquito bite is GREAT NEWS, folks."


But will higher rates be kind of a drag? (no I don't agree with the quote below)

"The moral of the story here is that as long as the real federal funds rate does not become especially burdensome ... and the economy can expand at an above-average rate, chances are the equity market should be able to eventually overcome the drag of a mild tightening effect," says John Lonski, chief economist at Moody's Investors Service.

http://www.sfgate.co...BUG8D7DJB01.DTL

More on wasteful Iraq spending:

Checks and review? Yesterday a leading British charity, Christian Aid, released a scathing report, "Fueling Suspicion," on the use of Iraqi oil revenue. It points out that the May 2003 U.N. resolution giving the C.P.A. the right to spend that revenue required the creation of an international oversight board, which would appoint an auditor to ensure that the funds were spent to benefit the Iraqi people.

Instead, the U.S. stalled, and the auditor didn't begin work until April 2004. Even then, according to an interim report, it faced "resistance from C.P.A. staff." And now, with the audit still unpublished, the C.P.A. has been dissolved.


http://www.nytimes.c...ion/29KRUG.html

More on worldwide peak oil:

As demand for oil becomes sharper, as global oil production continues to lag (and as producers such as Saudi Arabia and Nigeria grow more unstable) the struggle to maintain access to adequate energy supplies, always a critical mission for any nation, will become even more challenging and uncertain and take up even more resources and political attention.

This escalation will not only drive up the risk of conflict but will make it harder for governments to focus on long-term energy challenges, such as avoiding climate change, developing alternative fuels and alleviating Third World energy poverty -- challenges that are themselves critical to long-term energy security but which, ironically, will be seen as distracting from the current campaign to keep the oil flowing.


http://www.washingto...-2004Jun27.html

Good trading! ;)

#2 rog

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Posted 29 June 2004 - 08:03 AM

Intuit will shut down offices next week to save money (ie make the quarter). Employees that have accrued vacation time will be paid against the accrual. Employees that have not will go unpaid.

We have reached the point where companies are no longer able to mfg the penny to beat earnings. When a company is willing to sacrifice active employees to make the quarter, "investors" are not far behind.

#3 Guest_yobob1_*

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Posted 29 June 2004 - 08:04 AM

Once again Platinum when it starts slipping towards and past it's "normal" 2:1 ratio with gold is often a good leading indicator of the gold direction. I think silver's deficit and declining above ground inventories will limit the downside there, but gold may drop further than most would care to consider at this point. At this mornings levels gold could be heading back towards 380 and beyond. How far it can go remains to be seen and this could turn out to be a rather rapid whipsaw.

For all of you palladium fans - be careful. But, but, but didn't palladium hit $1,000 not too long ago? Why yes it did, and I'm gald you asked. That little event was caused by Ford making a giant stupid bet. They were buying like madmen, but something funny happened on the way to their perceived brilliance. Someone found a way to make catalytic convertors with a whole lot less palladium and the market collapsed when Ford tried to unwind their position. Car sales = palladium demand. Even if car sales turned around and started rising it is unlikely palladium would go up much. That said I think car sales are heading down, down, down. It might almost be an interesting short, palladium that is.

GM fesses up, the major retailers are back-tracking, and oil is softening. What's that spell? The death throes of the consumer, as predicted and on schedule. Fall, lovely name isn't it? I believe it will prove to a very fitting name economically this year. GWB's goose is cooked one way or another. If the Iraq mess doesn't get him the voter with the empty wallet will. Or maybe some of Big Swinging Dick's friends. A sudden premature demise of our loveable Chimp would give him the keys, which I suspect would lead to an election suspension. Scary times.

AG will once agian follow where the markets lead, meaning a .25 rise is in the bag. Anything, and I do mean anything, else will cause confusion and fear. You have two extremes. a .5 raise would blow the financial markets. A .25 rate cut would send the signal that the true state of the economy is very bad, as would simply leaving rates where they are, but to a lesser degree. It's either .25 up or the equivalent of financial "Shock and Awe wingohockingmoyamensing!"

RE: FDIC insurance of bank money market accounts. I think you need to look at those with a suspicious eye and on a case by case basis. In talking to my banker it is possible to have an FDIC insured bank MM account that is still subject to "legal and uninsured" principal losses. I believe it is even possible with one soley backed by treasuries, though that would truly be a TEOTWAWKI scenario. MM's normally pay a higher rate than a pass book account. Higher rates imply higher risk. It may all be a moot point since in the case of large numbers of failures I believe FDIC will fail. I still think it's a damn good idea to keep some cash under the mattress. In God we trust; all others should be looked at with a skeptical eye. Remember banks have no cash in them anymore. ATMs would be dry in a matter of hours. In reality there's only about $750 billion in cash on the entire planet, half of which is offshore. Deduct cash held by businesses for making change and you'll quickly discover there ain't much left for Ma and Pa Sheeple.

#4 Guest_yobob1_*

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Posted 29 June 2004 - 08:18 AM

.......One can almost imagine American proconsul Paul Bremer handing the keys to this rolling bomb over to former CIA pal and newly-minted Iraqi 'Prime Minister' Iyad Allawi with a snicker and a shrug. Thanks for the laughs, Iyad, but my helicopter is waiting on the roof.

    In January 2003, less than 60 days before U.S. forces rained fire and steel upon Baghdad in the ' Shock and Awe' portion of this escapade, Mr. Bush stood before Congress and the American people to deliver his State of the Union address. In it, he solemnly informed us that Iraq was in possession of 26,000 liters of anthrax, 38,000 liters of botulinum toxin, 500 tons (i.e. 1,000,000 pounds) of sarin, mustard and VX gas, 30,000 munitions to deliver these agents, mobile biological weapons labs, a program to procure uranium from Niger to use in nuclear bombs, and connections to al Qaeda.

    None of this - not one bit of it - was true. This didn't stop Bush'  people from repeating these lies over and over again, even as all the evidence accounted against them. Pottymouth-in-Chief Dick Cheney continues to flap the Iraq-al Qaeda canard despite the fact that his best evidence to support the theory, a bin Laden insider named Ibn al-Shaykh al-Libi, has gone off the reservation. Once, al-Libi confirmed the existence of a connection, but now he has changed his story completely.

    The going theory on this flip-flop is that al-Libi endured some of the "aggressive interrogation techniques" we have become famous for, and told his interrogators what they wanted to hear. If you had electrodes strapped to your testicles while you sat in one of those dark rooms with the swinging, bald light bulb, you'd  probably do something similar. Once the electrodes came off, and once al-Libi was confronted with evidence that contradicted his gonad-inspired claim, he reversed course and delivered another blow to Mr. Cheney's theory......

........"Total failure" and "ruined credibility" are the watchwords for the day. A process that never should have begun in the first place, a process which had nothing to do with defending the United States, has led us to a place where every 'goal' put forth by the Bush administration, no matter how stupid or simple, has turned to ash. This is the great gift Mr. Bush has delivered to us: A midnight deal, a washing of hands, and a quick exit out the back door. Honor and integrity indeed.


Tuck Tail and Run

#5 HiHat

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Posted 29 June 2004 - 08:26 AM

i think the domestic cash money supply has been cleaned up in regards
to counterfeit..........but offshore cash american money is rife with
counterfeit

somewhere not to far up ahead.........all this counterfeit will be dealt with.
leaving a slew of victums who will swear off holding bucks.

adding further to dumping.........lack of demand..and D-valuation.

#6 Guest_yobob1_*

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Posted 29 June 2004 - 08:34 AM

.....The Fed’s policy shift is the more immediate risk to contemplate — largely because the first step on the long road to normalization is now at hand.  There are several aspects of the “Fed factor” to contemplate: For starters, the unusual stimulus of the US central bank has been the high-octane fuel that has fed the “carry trade” in a multitude of asset classes — from mortgage markets and credit derivatives to emerging market and high-yield debt.  As the Fed acts to normalize its policy rate, the yield curve will eventually flatten and those trades will need to be unwound — an outcome which could prove quite destabilizing for fixed income markets, as well as the interest-rate-sensitive sectors of the economy they influence.  The same is likely for the overly-indebted American consumer — arguably the greatest beneficiary of the carry trade (see my 4 June dispatch, “The Mother of All Carry Trades”).  In an income-short climate, US households have benefited handsomely by extracting purchasing power from their largest asset holding — the home.  And such equity withdrawal — which amounted to more than 5% of disposable personal income in 2003 — was facilitated by the sharp appreciation in property values that, itself, was very much a by-product of low interest rates.  The coming normalization of Fed policy changes all that for an increasingly asset-dependent US economy (see my 21 June dispatch, “The Asset Economy”).

Nor should the impacts of the China slowdown be minimized.  The Chinese economy could be vulnerable on two counts — the first being a downshift arising from the tightening measures that have already been implemented.  Recent data on fixed investment, bank credit growth, and industrial output suggest the long awaited slowdown is now unfolding.  Secondly, China could also be vulnerable to a slowing of the American consumer — long the principal driver of its external demand.  The potential interplay between China’s domestic tightening campaign and an American-led weakening of its external demand only underscores the wildcard nature of the “China factor” insofar as the global economy and world financial markets are concerned.  As I have stressed repeatedly, the global repercussions of the China slowdown cannot be minimized.  China’s import explosion — a 40% increase in 2003, alone — has turned its economy into an engine of growth for Japan, Korea, Taiwan, and Germany.  As China slows, these economies will also come under pressure


Musings from the Roach Motel

Roach has the right picture, but I'm guessing he is far "misunderestimating" the speed with which this could all occur. Today's world is one of "just in time" across the full production, distribution and retailing sectors. In the old days, a slow down would slowly ripple through as inventories built first at the retailing sector, then into the distribution system and finally into production. Now there is an almost immediate reaction from the retail to the production sector. My guess is that this will not be a slow motion train wreck but more like having the bridge the train is crossing blown up by a 10 megaton bomb.

#7 mjkst27

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Posted 29 June 2004 - 08:35 AM

There was some credible discussion on the PruBear last night suggesting that the oil sands in Canada are quite viable on an EROEI basis, and while not as cost effective as Middle Eastern conventional oil, are not ridiculously expensive either, with processing technology improving by leaps and bounds. And there's lots of energy up there. LOTS. (And, who really cares about the environmental impact anyhow.)

So I'm not sure which world I'd rather live in. The one that says peak oil is here, and industrial civilization is toast by 2020. Or the one that says there's 50 more years worth of growth potential, but our government is taking over significant parts of the ME anyway, for "other reasons".

#8 The brown one

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Posted 29 June 2004 - 08:37 AM

Yobob.Good writer William Rivers Pitt-thanks.

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Posted 29 June 2004 - 08:38 AM

RE: FDIC insurance of bank money market accounts. I think you need to look at those with a suspicious eye and on a case by case basis. In talking to my banker it is possible to have an FDIC insured bank MM account that is still subject to "legal and uninsured" principal losses. I believe it is even possible with one soley backed by treasuries, though that would truly be a TEOTWAWKI scenario. MM's normally pay a higher rate than a pass book account. Higher rates imply higher risk. It may all be a moot point since in the case of large numbers of failures I believe FDIC will fail. I still think it's a damn good idea to keep some cash under the mattress. In God we trust; all others should be looked at with a skeptical eye. Remember banks have no cash in them anymore. ATMs would be dry in a matter of hours. In reality there's only about $750 billion in cash on the entire planet, half of which is offshore. Deduct cash held by businesses for making change and you'll quickly discover there ain't much left for Ma and Pa Sheeple.


Yobob.....

With the bank multiplier set at 8X, you are not wrong.

#10 Optical Rectitus

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Posted 29 June 2004 - 08:39 AM

So, our Canuckistan friends have made a decision and have a minority government led by Mr. Martin. Any feel for how long previous minority gvt's have lasted up there?

Curious

G'luck trading today

OR

#11 DrStool

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Posted 29 June 2004 - 08:50 AM

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#12 Guest_yobob1_*

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Posted 29 June 2004 - 08:52 AM

There was some credible discussion on the PruBear last night suggesting that the oil sands in Canada are quite viable on an EROEI basis, and while not as cost effective as Middle Eastern conventional oil, are not ridiculously expensive either, with processing technology improving by leaps and bounds. And there's lots of energy up there. LOTS. (And, who really cares about the environmental impact anyhow.)

So I'm not sure which world I'd rather live in. The one that says peak oil is here, and industrial civilization is toast by 2020. Or the one that says there's 50 more years worth of growth potential, but our government is taking over significant parts of the ME anyway, for "other reasons".

The production of oils sands only remains economically viable in Canada until a pipeline is built to tap the NG which is required for the production of oil sands. If the NG were calculated at market price, the cost of this production goes way up and indeed it is likely that it takes more energy to produce the oil than the oil will give off. If that's the case then that potential oil will never be produced. Simple thermodynamics.

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Posted 29 June 2004 - 09:12 AM

OT but made me LOL. Now thats paranoia!

Soiled underwear closes down Erie reservoir
Associated Press

ERIE, Pa. -- A man who soiled his underwear and tried to dispose of the evidence by tossing it over the fence of the city's largest reservoir has been fined $5,000.

The city bomb squad and hazardous materials crew responded after an Erie Water Works employee spotted a black bag near the 33-million gallon Sigsbee Reservoir last month.

The reservoir was shut down for several hours while the bomb squad X-rayed the bag and hazardous materials crews waited to test it.


http://www.dominionp.../2004/06/29/ae/


:lol: :lol: :lol:

#14 Bearbones

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Posted 29 June 2004 - 09:14 AM

There was some credible discussion on the PruBear last night suggesting that the oil sands in Canada are quite viable on an EROEI basis, and while not as cost effective as Middle Eastern conventional oil, are not ridiculously expensive either, with processing technology improving by leaps and bounds. And there's lots of energy up there. LOTS. (And, who really cares about the environmental impact anyhow.)

The cost of extracting oil from the oil sands is currently about $13 per barrel depending on the area. The primary cost is natural gas which is used to heat water to seperate the oil from the sands. The major project, Syncrude, is currently taking out about 270,000 barrels per day.
There were rumors last week that Soros and/or Jimmy Rogers had a major position in the Canadian Oil Sands Trust. That remains a rumor of course.

The Canadian energy story is still in its infancy. Resource prices may soften for awhile here allowing investors to pick up some strategic longs as few yet believe that energy is a long-term problem. An alternative is the oil & gas income trusts, most with gross yields north of 10%, that pay you while you wait.

http://www.cos-trust.com/

#15 Bearbones

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Posted 29 June 2004 - 09:15 AM

THE INTERNATIONAL COUNCIL OF SHOPPING CENTERS REPORTS THAT
CHAIN STORE SALES FELL 1.2% DURING THE JUNE 20-26 WEEK, MORE
THAN WIPING OUT THREE WEEKS OF GAINS TOTALING BUT 0.5% WHICH
FOLLOWING THREE WEEKS OF DECLINES CUMULATING TO 1.8%. AT 4.2%
SUCH IS THE SMALLEST YEAR-OVER-YEAR GAIN SINCE JANUARY AND HINTS
THAT THE HIGH GASOLINE PRICES MAY FINALLY BE CUTTING INTO
CONSUMER SPENDING.





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