MarketWatch.com - Pre-Market Indications

Monday, January 31, 2011

Indications: U.S. futures gain, with Egypt, earnings in focus

Stock Assault 2.0 - Artificial Intelligence Stock Market Software

By Polya Lesova and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures tallied modest gains Monday as investors weighed concerns over growing unrest in Egypt against optimism over relatively robust corporate earnings thus far.

Stock-index futures held near their session highs after the U.S. government said consumer spending and income rose in December, the former slightly more than analysts had expected. Read more about the latest economic reports.

“Much of today’s data is already known to the markets, thus muting its impact,” said Dan Greenhaus, chief economic strategist at Miller Tabak & Co.

Futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\h11 (DJH11 11,810, +35.00, +0.30%)  rose 38 points to 11,813, and S&P 500 futures /quotes/comstock/21m!f:sp\h11 (SPH11 1,279, +7.60, +0.60%)  gained 5.7 points to 1,277.2.

Nasdaq 100 futures /quotes/comstock/21m!f:nd\h11 (NDH11 2,273, +4.50, +0.20%)  advanced 7.5 points to 2,275.5.

On Friday, the blue-chip Dow index /quotes/comstock/10w!i:dji/delayed (DJIA 11,853, +28.84, +0.24%)  slumped 166.13 points, or 1.4%, marking its biggest decline since November, after investors were spooked by the unrest in Egypt.

Unrest in Egypt hits global markets

Antigovernment protests in Egypt have affected world financial markets, with U.S. stocks suffering the biggest one-day loss in six months.

Pressure on Egyptian President Hosni Mubarak, in power for decades, escalated during the weekend as protests against his rule continued on the streets of Cairo.

The situation in Egypt is “unsettling for sentiment generally,” said Mike Lenhoff, chief strategist at Brewin Dolphin in London.

“Who knows where it’s going to end and what contagion may result from it?” he said. “It’s clearly forcing up commodity prices, and that is not great news for inflation.”

However, “the downside [for equity markets] is fairly limited since we’ve had good economic news and good earnings results,” Lenhoff said.

Exxon earnings

Early corporate results Monday had oil giant Exxon Mobil Corp. /quotes/comstock/13*!xom (XOM 79.83, +0.84, +1.06%)  reporting a larger-than-anticipated jump in quarterly profit, while newspaper publisher Gannett Co. Inc. /quotes/comstock/13*!gci (GCI 14.70, -0.50, -3.26%) reported a slight rise in fourth-quarter revenue. Read about Exxon’s results.

In commodity markets, oil futures rose 25 cents to $89.59 a barrel in electronic trading on Globex on concerns that crude supplies may be disrupted from the possible closure of the Suez Canal.

“While there is currently no evidence of imminent closure and Egyptian officials have publicly assured that traffic is running as normal, the proximity of the protests to the canal itself has raised market concerns about security,” said Ann Wyman, an analyst at Nomura, in a report.

“Moreover, the imposition of curfews, if sustained, could hamper the canal’s operations and lead to delays,” she wrote.

Moody’s Investors Service downgraded Egypt’s government bond ratings to Ba2 from Ba1, citing the sharp increase in political risk. Read more about Egypt’s downgrade.

The Egyptian stock exchange remained closed for a second day after equities plunged last week.

Equity markets in Asia and Europe posted losses. In Japan, the Nikkei 225 Stock Average /quotes/comstock/64e!i:ni225 (JP:NI225 10,238, -122.42, -1.18%)   dropped 1.2%, and the Stoxx Europe 600 index /quotes/comstock/22c!sxxp (ST:STOXX600 280.49, +0.04, +0.01%)  declined 0.4% in intraday trading.

Polya Lesova is chief of MarketWatch’s London bureau. Kate Gibson is a reporter for MarketWatch, based in New York.

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NYSE Arca Morning Update - 08:30:00 ET

NYSE Arca Morning Update for Monday, Jan 31, 2011 :

STOCKS TRADING ON NYSE Arca AT A PRICE 15% OR MORE AWAY FROM
THE PREVIOUS TRADE DAY'S CONSOLIDATED CLOSE PRICE (AS OF 08:30:00 ET)

Stock Friday's Close Current Price Pct Change Current NYSE ARCA Vol
DEPO $6.23 $8.18 31.3% 328,093
NPSP $7.61 $9.80 28.8% 170,489


10 MOST ACTIVE STOCKS ON NYSE ARCA AS OF 08:30:00 ET

BASED ON DOLLARS TRADED: | BASED ON SHARES TRADED:
Stock $ Volume Price PctChg | Stock Share Vol Price PctChg
SPY $138091215 $128.13 0.3% | C 3,163,306 $4.74 0.4%
MEE $59,490,728 $64.56 12.8% | SPY 1,078,942 $128.13 0.3%
ANR $36,140,252 $54.79 ( 5.3%) | MEE 920,657 $64.56 12.8%
QQQQ $23,975,489 $55.92 0.3% | ANR 661,908 $54.79 ( 5.3%)
C $14,960,106 $4.74 0.4% | F 561,081 $16.30 0.3%
XOM $13,780,731 $80.05 1.3% | QQQQ 428,949 $55.92 0.3%
EWZ $13,347,977 $73.25 1.0% | DEPO 328,093 $8.18 31.3%
GLD $11,783,121 $129.52 ( 0.6%) | PSTI 243,974 $3.25 4.2%
AAPL $11,077,085 $337.79 0.5% | BAC 194,116 $13.72 0.8%
F $9,123,938 $16.30 0.3% | EWZ 182,842 $73.25 1.0%


Price changes may be affected by symbol splits and dividends.

Consolidated close price is the last print (excluding prints with trade
conditions) prior to 4PM ET.

This information is also updated on our web page every morning at 8:35ET:
http://www.tradearca.com/data/volume/daily_update.asp

This material is for informational purposes only.
NYSE Euronext and its affiliates ("NYSE Arca") are not soliciting any action based upon it.
This material is not to be construed as an offer to buy or sell any security in any jurisdiction where such an offer or solicitation would be illegal.
Any opinions expressed in this material are NYSE Arca opinions only.
NYSE Arca undertakes no obligation to update any of the information contained in this material in light of new information or future events.
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OF THIS MATERIAL, ANY DELAY OR INTERRUPTION OF SERVICE OR OMISSIONS OR INACCURACIES IN THE MATERIAL) WITH RESPECT TO THIS MATERIAL.

Copyright [2011] by NYSE Euronext. All rights reserved. Reproduction and redistribution prohibited without prior express consent.

Indications: U.S. futures edge up, with Egypt, results in focus

Stock Assault 2.0 - Artificial Intelligence Stock Market Software

By Polya Lesova, MarketWatch

LONDON (MarketWatch) â€" U.S. futures edged higher Monday, as investors weighed concerns over growing unrest in Egypt against optimism over relatively robust corporate earnings thus far.

Futures on the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\h11 (DJH11 11,775, 0.00, 0.00%)  rose 1 point to 11,776 and S&P 500 futures /quotes/comstock/21m!f:sp\h11 (SPH11 1,274, +2.90, +0.23%)  gained 2.40 points to 1,273.90.

Nasdaq 100 futures /quotes/comstock/21m!f:nd\h11 (NDH11 2,272, +4.00, +0.18%)  advanced 4.50 points to 2,272.50.

The blue-chip Dow index /quotes/comstock/10w!i:dji/delayed (DJIA 11,824, -166.13, -1.39%)  slumped 166.13 points, or 1.4%, on Friday, posting its biggest decline since November after investors were spooked by the unrest in Egypt.

Unrest in Egypt hits global financial markets

Anti-government protests in Egypt have affected world financial markets, with US stocks suffering the biggest one-day loss in six months. Video courtesy of Fox News

Pressure on President Hosni Mubarak, who has been in power for decades, escalated over the weekend as protests against his rule continued to rock the streets of Cairo.

The situation in Egypt is “unsettling for sentiment generally,” said Mike Lenhoff, chief strategist at Brewin Dolphin in London.

“Who knows where it’s going to end and what contagion may result from it,” he said. “It’s clearly forcing up commodity prices and that is not great news for inflation.”

However, “the downside [for equity markets] is fairly limited since we’ve had good economic news and good earnings results,” Lenhoff said.

Exxon earnings due

U.S. investors are awaiting earnings reports from several companies, including oil giant Exxon Mobil Corp. /quotes/comstock/13*!xom/quotes/nls/xom (XOM 78.99, -0.89, -1.11%)  and newspaper publisher Gannett Co. Inc. /quotes/comstock/13*!gci/quotes/nls/gci (GCI 15.19, +0.16, +1.06%)  

Exxon is expected to report fourth-quarter earnings of $1.62 a share, according to a survey of analysts by FactSet Research.

On the economic front, data on personal income for December are due at 8:30 a.m. Eastern time, to be followed by the Chicago PMI for January at 9:45 a.m. Eastern.

In the commodity markets, oil futures rose 13 cents to $89.47 a barrel in electronic trading on Globex on concerns that crude supplies may be disrupted from the possible closure of the Suez Canal.

“While there is currently no evidence of imminent closure and Egyptian officials have publicly assured that traffic is running as normal, the proximity of the protests to the canal itself has raised market concerns about security,” said Ann Wyman, an analyst at Nomura, in a report.

“Moreover, the imposition of curfews, if sustained, could hamper the canal’s operations and lead to delays,” she wrote.

Moody’s Investors Service downgraded Egypt’s government bond ratings to Ba2 from Ba1, citing the sharp increase in political risk.

The Egyptian stock exchange, meanwhile, remained closed for a second day after equities plunged last week.

Equity markets in Asia and Europe posted losses. In Japan, the Nikkei Stock Average dropped 1.2% and the Stoxx Europe 600 index /quotes/comstock/22c!sxxp (ST:STOXX600 279.09, -1.36, -0.48%)  declined 0.5% in intraday trading.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 78.05, -0.08, -0.10%) , which tracks the performance of the greenback against a basket of other major currencies, fell 0.2% to 78.010.

The euro gained 0.4% to $1.3656.

Polya Lesova is chief of MarketWatch’s London bureau.

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Saturday, January 29, 2011

A Nation Exclusively Run For Corporate Interests

Stock Assault 2.0 - Artificial Intelligence Stock Market Software

The US welfare state rumbles on and in some sectors of business it is being encouraged. We have to assume this attitude is based on more and increasing profits. Needless to say, it is cloaked in language that refers to the poor suffering people. The economy in the US and in many other countries is being run by and for major corporate interests. It is called corporatist fascism. Not many truthfully call it that, but that is what it is. We have government paid for and controlled by wealthy corporatist interest. In America you have $14 trillion in short-term debt and $105 billion in long-term commitments. Then there is the off budget items, such as wars and occupations that adds considerably to this debt, all attuned to keep the welfare state running. Both parties refuse to cut much of anything, although the Republicans say they will. We are skeptical after watching the tax bill become an $862 billion pork stimulus package. Discretionary spending is where the cuts will probab ly occur if there are any.

The cost of carrying this debt becomes more unpayable and onerous daily and there is little attempt to stop it. The Fed may control the short end of the Treasury bond market, but it has minor influence on the 10-year notes and 30-year bonds. As a result yields have risen and the spread in yields between short and long-term paper has grown to 32-year highs. Needless to say, holders of long-term notes and bonds want to be better compensated because they see more risk, as US debt grows uncontrollably higher. Short-term yields have stayed about the same because the Fed controls them. The demand for capital in small and medium companies has been muted by lenders reluctance to lend for the past two years. Zero interest rates have not helped these potential borrowers that create 70% of the jobs. Funds though are readily available to the major transnational conglomerates. Government and the Fed won’t talk about it, but they are manipulating all markets, and that is a long-term n egative factor because everything they do is for their own benefit â€" not for the people. The state of political affairs could be worse but they certainly are not good. We liken the US economy to a rudderless ship being pulled and jerked by one special interest group or another from side to side never gaining equilibrium. As long as this situation persists no headway will be made in solving budget deficits, nor in neutralizing the welfare state.

At the same time we see red flags all over Europe. It is pointed out that in Europe, Greece is uncompetitive and has a sodden public sector; that Ireland borrowed too much and was moving more to a welfare state; that Belgium was a house truly divided with financial problems; that Portugal’s economy lagged like that of Greece and has similar major budget deficits, and that Spain doesn’t have a diverse enough economy and was literally destroyed by one interest rate fits all. What no one wants to contemplate is why did this all happen? That is because banks lent them all as much money as they wanted. The bankers, the professionals, should have never lent them such outrageous sums in the first place. Now the banks with their bad loans are demanding they be bailed out. It is ludicrous and the banks should be allowed to go bankrupt, they are the experts. They knew exactly what they were doing. That is Europe’s solution and the quicker they realize it the better off the Con tinent will be.

As of this writing gold has fallen about $100, and silver some $3.00. Support for gold lies anywhere between $1,280 and $1,340. Many are disappointed that both metals corrected, which is natural, but they are more upset that the correction was deliberately man-made.

Part of the corrective process was that Germany supposedly was going to save the euro, or at least that is what jawboning Chancellor Merkel seems to think. Germany is not about to bail out six insolvent countries. If they do or even participate in spending of more than the original solvent euro nation commitment of $1 trillion, they may become insolvent as well. The German people are well aware of this and they won’t allow it to happen. As we reported in the last issue contingency plans are already underway to reintroduce the Deutsche mark if necessary. The euro zone countries are facing major funding all year, but the heavy end will be in the first quarter with lighter demands in the second quarter. Germany is not about to bail out sick members or the euro, especially with Irish elections coming in three weeks. Thus, we see no eminent moves by Germany.

Gold has spent the last two years moving up in price as it challenged the US dollar for supremacy as the world reserve currency. Now, inflation is again in investor’s sights, as companies are forced to raise prices 6% to 15%, after having raised prices over the past year mostly in the form of small packaging. We’d call that stealth inflation. Manufacturers and producers think they are fooling the American public, but they are not. They are just demonstrating how deceitful they are. Raw materials costs are rising and they will continue to rise and so will real inflation, and that makes gold and silver move higher to reflect the loss in purchasing power of the public and the loss of value of all currencies versus gold and silver. In our previous report this week we pointed out the massive short covering by commercials in the gold pits. Unprecedented net short reduction, which can only portent a major upward move in gold and silver. The percentage of silver short covering was not nearly as successful for JPM, HSBC, GS and Citi. That is still yet to come. It will expedite the upside as it has done recently. All the elitists have done is ended their short bias and now will join you on the long side of the market. Their tactics have given you another opportunity to buy at cheaper prices.

The bond market yields will move slowly higher on the long end for the remainder of the year and thus, bonds should move slightly lower.

Stocks, which are way overpriced, will eventually fall probably back to 10,000 on the Dow.

Conservative economists seem to think the economy will have a few years of stable to moderately deflating prices. We find that ludicrous with another $2.5 trillion being jammed into the economy. Even another deflationary down leg in real estate would not offset such spending, which follows $2.5 trillion spent under QE1 plus stimulus. That last attempt to increase employment was a failure. This time it will be the same unless there could be giant productivity gains, which is an unknown.

Recovery is difficult as savings persist at a 4% level. Wages are contracting as inflation increases sapping consumer purchasing power. Many countries are involved in currency wars and growth should slow sharply as tax breaks end. Small business, which saw lending fall 25% over the past two years are in no mood to borrow unless absolutely necessary, even if funds are available. There will be no aid from inventory buildup that was accomplished last year. Topping off resistance is an again falling real estate market, which does not tend to instill confidence. Then there is the possibility of $60 billion in budget cuts, which won’t be helpful to consumption. We cannot leave out forced austerity measures by municipalities and states. Perhaps including hundreds of bankruptcies. We also must consider illiquidity and major losses on the horizon for those holding municipal bonds as a drag on the economy. State budget shortfalls are more than $125 billion. Then consumers have to deal with tax increases that will curtail buying. We see political and social upheaval worldwide. The question is will it come to America? When we were in the brokerage business we always said when in doubt don’t. That is what is in process in America today. Chances are the market will correct and real interest rates will rise. All these factors mean it is going to be very difficult for GDP growth to exceed 2-1/4%, at a real cost again of $2.5 trillion.

 

The US Treasury Department announced on Thursday that it will shrink the amount of money it has on deposit at the Federal Reserve to fund emergency lending facilities because it is nearing the legal debt limit.

Beginning Feb. 3, Treasury will gradually decrease the balance in the Supplementary Financing Program to $5 billion from $200 billion. It can do so by letting short-term bills that finance it mature and not issue new ones.

A Treasury official, speaking to reporters on background, said the action was being taken because Treasury was running near the $14.294 trillion debt limit. As of Jan. 25, it had $14.015 trillion of debt outstanding so only about $279 billion of legal borrowing authority was left.

The Fed’s weekly H.8 report of banks’ assets & liabilities clearly shows that big banks are more hedge fund that lending institution and bank speculation is running amok.

For December, ‘bank credit’ is down 5.4% y/y with ‘consumer loans’ contracting 4.9% y/y. ‘Interbank loans’ collapsed 41.6%! ‘Total assets’ declined 3.5%. But ‘trading assets’ bubbled up 86.2%!!!!

What is even worse is ‘deposits’ have declined 4.3%, with ‘large time deposits’ tanking 19.7%; but ‘trading liabilities’ have surged a criminal 157.3%!!!

The surge in trading assets and liabilities, and leverage, commenced in Q2, which suggests that the necessity to generate profits was acute…This is the prime proof that Ben’s QE is a thinly veiled scheme to keep the big zombie banks afloat on the back of taxpayers.

Easy Al used the ‘carry trade’ to surreptitiously bailout the money center banks in the early nineties. Bennie Mae is using QE to surreptitiously bail out the big banks now.

And Ben, B-Dud and others in the Fed cabal have the temerity to say that QE is for the unemployed!

Goldman Sachs collected $2.9 billion from the American International Group as payout on a speculative trade it placed for the benefit of its own account, receiving the bulk of those funds after AIG received an enormous taxpayer rescue, according to the final report of an investigative panel appointed by Congress.

The fact that a significant slice of the proceeds secured by Goldman through the AIG bailout landed in its own account as opposed to those of its clients or business partners has not been previously disclosed. These details about the workings of the controversial AIG bailout, which eventually swelled to $182 billion, are among the more eye-catching revelations in the report to be released Thursday by the bipartisan Financial Crisis Inquiry Commission.

 

A deeply divided U.S. investigative panel issued a scathing critique of the culture of deregulation championed by Former Federal Reserve Chairman Alan Greenspan, saying the government had ample power to avert the financial crisis of 2007-2009 and chose not to use it.

The 10-member Financial Crisis Inquiry Commission's final report, released on Thursday, was endorsed only by its six Democratic members, undermining its impact as the post-crisis Dodd-Frank banking reforms are being implemented.

In the fight between pro-reform Democrats and anti-reform Republicans, the report and its accompanying dissents provide fodder for both sides, while highlighting partisan fault lines that today pervade political Washington, from financial regulation to health care to addressing the budget deficit.

A competing minority report from three Republican commission members, also released on Thursday, largely exonerates Greenspan, saying, "U.S. monetary policy may have contributed to the credit bubble but did not cause it."

Another report, from the 10-member commission's fourth Republican, focuses mostly on U.S. housing policy in explaining the origins of the crisis that rocked global markets, dragged the economy into a deep recession and unleashed reforms.

The unveiling of the three reports produced by the commission's warring members was seen by financial markets as a non-event. "The market is not really going to react -- the market already has a very good idea of what happened," said Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel Inc in Cincinnati, which owns bank shares.

The mountain of interview notes and internal documents obtained by the panel, however, contained some revelations. For instance, Federal Reserve Chairman Ben Bernanke told the panel that the crisis put 12 of the 13 most important U.S. financial firms at risk of failure within a period of a week or two, and that it surpassed in severity even the Great Depression, a period in which he is a noted expert.

"As a scholar of the Great Depression, I honestly believe that September and October of 2008 was the worst financial crisis in global history, including the Great Depression," said Bernanke in a November 2009 interview with the commission.

"If you look at the firms that came under pressure in that period ... only one ... was not at serious risk of failure."

It was not disclosed which of the 13 top financial institutions Bernanke thought was not at risk of failure. Bernanke did say that Goldman Sachs was not immune.

"Even Goldman Sachs, we thought there was a real chance that they would go under," he said.

 

Payrolls decreased in 35 U.S. states in December, while the unemployment rate rose in 20, showing the labor market recovery is slow to gather momentum. New York led the nation with 22,800 job cuts last month, followed by Minnesota with 22,400 firings, and Florida with 17,900, figures from the Labor Department showed today in Washington.

The report is consistent with figures on Jan. 7 that showed a fewer-than-forecast 103,000 jobs were created nationwide last month even as unemployment fell. Federal Reserve policy makers meeting today and tomorrow are likely to reiterate a pledge to buy $600 billion in government securities through June to help lower unemployment and spur growth. “This kind of mixed picture, combined with some of the positives we’ve seen in retail sales and manufacturing data, rising credit, tells us we’re at a turning point,” said Steven Cochrane, director of regional economics at Moody’s Analytics Inc. in West Chester, Pennsylvania.

Other reports today showed consumer confidence rose more than forecast in January as Americans gained optimism over the outlook for jobs, while residential real-estate prices dropped in November by the most in a year.

 

U.S. employment expenses rose 0.4 percent in the fourth quarter, less than forecast and capping a year in which compensation posted the second-smallest increase on record. The 0.4 percent gain in the employment cost index from October through December matched the rise in the prior three months, Labor Department figures showed today. Labor costs last year rose 2 percent after a 1.4 percent increase in 2009 that was the smallest since record-keeping began in 1982.

Companies have been slow to add to their payrolls or offer higher salaries until demand strengthens further. Unemployment projected to remain above 9 percent this year and limited price pressures explain why Federal Reserve policy makers this week stuck to their plan to buy $600 billion in securities by June to spur the world’s largest economy.

 

The U.S. government’s budget deficit will widen this year to $1.5 trillion, according to a report likely to further inflame the debate in Washington over how to reduce the gap between spending and revenue.

The projected shortfall, up from last year’s $1.3 trillion, increased in part because of the cost of the $858 billion tax- cut measure passed in last year’s lame-duck session of Congress, according to the nonpartisan Congressional Budget Office.

The agency, in its semi-annual revision of the government’s budget outlook, said the 2012 deficit will narrow to $1.1 trillion. It projected the economy will grow this year by 3 percent and that the unemployment rate will fall slightly to 9.2 percent from 9.4 percent in December. It will remain above 8 percent for the duration of President Barack Obama’s term, the report said.

The agency painted a grim picture of the longer-term budget outlook. It said the government will run up $12 trillion in deficits over the next 10 years if Congress permanently extends the tax-cut package, slated to expire at the end of 2012, and continues other longstanding policies such as preventing scheduled cuts in Medicare payments to doctors.

By 2021, the agency said, the nation’s debt will rise to almost 100 percent of its gross domestic product, the highest since World War II.

“CBO’s report should be another wake-up call to the nation,” said Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat. “The fiscal challenge confronting us is enormous. To solve this problem, it will require real compromise and a great deal of political will.”

“We need to have both sides, Democrats and Republicans, willing to move off their fixed positions and find common ground,” Conrad said.

 

Purchases of new houses in the U.S. rose more than forecast in December, propelled by a record surge in the West as buyers in California may have rushed to qualify for a state tax credit before it expired.

Sales climbed 18 percent to a 329,000 annual pace, figures from the Commerce Department showed today in Washington. The percentage gain was the biggest since 1992, and was led by a record 72 percent jump in the West.

“The increase being driven by the West definitely looks suspicious,” said Daniel Silver, an economist at JPMorgan Chase & Co. in New York. “New-home sales are definitely lagging behind other economic indicators. As we see job growth and signs of economic stability, the housing market will improve, but when that will happen is hard to say.”

Following the industry’s worst year on record, builders may keep facing competition from a growing glut of foreclosed existing homes that is depressing prices. The lack of a sustained housing rebound and unemployment above 9 percent are among reasons Federal Reserve policy makers today said they’ll press on with a second round of stimulus that will pump $600 billion into financial markets by June.

 

Mortgage applications in the U.S. fell last week to the lowest level since November 2008, a reminder any housing recovery will take time to develop.

The Mortgage Bankers Association’s index of loan applications decreased 13 percent in the week ended Jan. 21, figures from the Washington-based group showed today. Both refinancing and purchase applications fell.

“Usually when rates go up, refinancing goes down,” Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “We don’t see existing home sales any higher at the end of the year.”

Declining home prices and rising lending rates may prompt Americans to hold off on both refinance and purchase applications. Any lasting recovery in the housing market hinges on lowering unemployment, which had been at 9.4 percent or higher for 20 months, the longest since monthly records began in 1948.

The refinancing gauge dropped 15 percent to the lowest in a year, while purchase applications fell 8.7 percent to the lowest level since October, the mortgage bankers’ group said. The average rate on a 30-year fixed loan rose to 4.80 percent last week from 4.77 percent the prior week. The rate reached 4.21 percent in October, the lowest since the group’s records began in 1990.

At the current 30-year rate, monthly payments for each $100,000 of a loan would be $524.67 or about $13 less than the same week the prior year, when the rate was 5.02 percent. The average rate on a 15-year fixed mortgage declined to 4.12 percent from 4.16 percent.

 

Less Refinancing

The share of applicants seeking to refinance a loan fell to 70.3 percent last week from 73 percent the prior week.

Residential real-estate prices dropped in November by 1.6 percent from a year earlier, the biggest annual decline in a year, according to the S&P/Case-Shiller index of home values in 20 cities released yesterday.

Confidence among U.S. homebuilders has stagnated as builders are reluctant to start projects while foreclosures mount. The National Association of Home Builders/Wells Fargo sentiment index registered a reading of 16 in January, the same as the past two months, data from the Washington-based group showed last week. Readings below 50 mean more respondents said conditions were poor.

The applications data contrast with sales figures showing a pickup in demand. Purchases of existing houses increased 12 percent to a 5.28 million annual rate last month, the most since May, as more distressed sales took place following several months of foreclosures moratoriums, figures from the National Association of Realtors showed Jan. 20.

 

New-Home Sales

A report today may show sales of new homes rose 3.5 percent to a 300,000 annual pace last month, according to the median estimate of economists surveyed by Bloomberg before the Commerce Department report at 10 a.m. Purchases are hovering close to record low of 274,000 reached in August.

Lennar Corp., the third-largest U.S. homebuilder by revenue, is among companies bracing for a slow recovery. The Miami-based builder on Jan. 11 reported fourth-quarter profit that beat analyst estimates on cost cuts and earnings from its distressed-investing unit.

“The housing recovery will traverse a long and bumpy road,” Stuart Miller, chief executive officer, said in a conference call that day.

 

Interest rates on auto loans are hitting record lows, a boon to car buyers and a benefit to the nation's recovering auto industry.

The interest rate on a four-year loan for a new car averaged 6.21% in the latest weekly survey of major banks and thrifts, according to Bankrate.com. That's the lowest average rate in more than two decades of tracking. A few lenders are offering rates as low as 2.99%, says Greg McBride, senior financial analyst for Bankrate.com.

Edmunds.com says interest rates on new car purchases overall in December, including automaker-subsidized loans, averaged 4.16%, the lowest since the car-buying research site started keeping track of rates in January 2002.

Rates were a half-percentage point lower than in December 2009. Edmunds recorded the highest average new car loan rate at 8% in January 2006, when sales demand was higher and credit-rating standards looser.

 

If our prognostications are correct and we attain 14% inflation by the end of the year, that would put a real crimp in consumption. Those increases will come mainly in items that have to be used every day, such as food and petroleum based products. Gasoline is about $3.25 a gallon. It could go to $5.00 a gallon. Food prices could double based on commodity prices surging over the past nine months. There is no question that there is more money and credit in the system, but that does not guarantee growth or a strengthening economy, we saw that in QE1. GDP will rise as we pointed out simply because there is more liquidity in the system. That growth is caused by inflation, which is not lasting nor a reality. This is a patchwork system that does not reflect economic growth or a healthy economy.

What people must understand is that all governments are extending the time line on debt, which in the intermediate to long run they are creating a much bigger problem of greater magnitude and in the process debt of banks and other businesses, the anointed ones, is being shifted to the public. This debt is of the poorest quality, which means most of it will end up worthless. It is astounding the brazenness and arrogance of these elitists. They will soon discover that billions of people throughout the world know what their plans are.

 

Former Minnesota Gov. Jesse Ventura sued the Department of Homeland Security and the Transportation Security Administration on Monday, alleging full-body scans and pat-downs at airport checkpoints violate his right to be free from unreasonable searches and seizures.

Ventura is asking a federal judge in Minnesota to issue an injunction ordering officials to stop subjecting him to "warrantless and suspicionless" scans and body searches.

The lawsuit, which also names Homeland Security Secretary Janet Napolitano and TSA Administrator John Pistole as defendants, argues the searches are "unwarranted and unreasonable intrusions on Governor Ventura's personal privacy and dignity . and are a justifiable cause for him to be concerned for his personal health and well-being."

According to the lawsuit, Ventura received a hip replacement in 2008, and since then, his titanium implant has set off metal detectors at airport security checkpoints. The lawsuit said that prior to last November officials had used a non-invasive hand-held wand to scan his body as a secondary security measure.

But when Ventura set off the metal detector in November, he was instead subjected to a body pat-down and was not given the option of a scan with a hand-held wand or an exemption for being a frequent traveler, the lawsuit said.

The lawsuit said the pat-down "exposed him to humiliation and degradation through unwanted touching, gripping and rubbing of the intimate areas of his body."

It claims that under TSA's policy, Ventura will be required to either go through a full-body scanner or submit to a pat-down every time he travels because he will always set off the metal detector.

Ventura, who was Minnesota governor from 1999 through 2002 and is now the host of the television program "Conspiracy Theory," did not immediately return a phone message seeking comment.

Napolitano said in December that the new technology and the pat-downs were "objectively safer for our traveling public."

 

Robert Lappin, a Salem businessman and founder of the Lappin Charitable Foundation, is among nine plaintiffs who yesterday filed a class-action lawsuit, alleging negligence by federal securities regulators in the Bernard Madoff case.

The lawsuit, filed in federal court in New York against the Securities and Exchange Commission, seeks millions of dollars in restitution for the plaintiffs, who, according to their lawyer, lost a total of about $70 million in the Madoff Ponzi scheme.

“We’re saying the SEC was responsible, negligent, for the losses suffered by the plaintiffs,’’ said Howard Kleinhendler, the lawyer.

Lappin is suing in his capacity as trustee of the retirement fund of his real estate firm, Shetland Properties. The fund lost $5 million in the swindle. Lappin, 88, personally reimbursed the plan for those losses.

The Lappin Charitable Foundation, which supports programs for Jewish youth, also said it lost $8 million, but is not part of this suit. In an example of how complicated the math can be for victims, the trustee in the Madoff bankruptcy case last month sued Lappin to return $2 million in fictitious gains. It’s unclear whether those gains were reaped by the foundation, the business, or Lappin personally.

Lappin could not be reached late yesterday.

The suit, first filed in December, was refiled yesterday.

 

Merrill Lynch agreed to pay $10 million yesterday to settle fraud accusations by securities regulators.

The Securities and Exchange Commission had accused Merrill of fraud, saying the company misused private information from its customers to place trades on its own behalf and that the company repeatedly charged its customers trading fees without their knowledge. “The conduct here was clearly inappropriate,’’ Scott Friestad, the agency’s associate director for enforcement, said. “Investors have the right to expect that their brokers won’t misuse their order information.’’

Bank of America acquired Merrill in January 2009. The SEC said the conduct took place before the merger. Merrill has since adopted “a number of policy changes,’’ Bill Halldin, a Bank of America spokesman, said.

The agency’s charges stem from Merrill’s equity strategy desk, which ran the proprietary trading operation from 2003 to 2005.

Merrill’s proprietary traders received tips from colleagues on the company’s market-making desk about confidential customer trade orders, according to the SEC. The proprietary traders then used the information to place trades on the firm’s behalf.

“In doing so, Merrill misused this information and acted contrary to its representations to customers,’’ the SEC said.

 

BP Plc was accused by oil-spill victims’ lawyers of breaking civil racketeering law by engaging in acts that led to the worst such disaster in U.S. history.

“BP engaged in a pattern of fraudulent conduct directed at regulators from the inception of the Macondo project, continuing through and after the spill and to this day,” victims’ lawyers Stephen Herman and James Roy, said yesterday in a court filing in New Orleans. “BP’s fraudulent actions and omissions were part of a broader pattern of unlawful conduct that it has employed over the years to place profits over safety.”

Herman and Roy are liaison counsel for a committee representing plaintiffs in more than 400 lawsuits over personal and economic injuries caused by last April’s explosion of the Deepwater Horizon drilling rig off the Louisiana coast.

The rig, owned by a unit of Transocean Ltd., was drilling the well, named Macondo, for BP at the time of the blast. BP is the only company named as a defendant in the spill victims’ master civil complaint under the Racketeer Influenced and Corrupt Organizations Act, or RICO, originally aimed at organized crime.

 

Manhattan District Attorney Cyrus Vance Jr. said he wants harsher penalties, including mandatory prison time, for people convicted of major securities fraud in New York. Vance said in a speech at New York City Bar Association in midtown Manhattan yesterday that he will call on the legislature to change the Martin Act, New York’s securities fraud statute. He said he will seek prison sentences of as long as 8 1/3 years to 25 years for frauds involving more than $1 million. The crime now carries no minimum prison sentence, regardless of the money involved.

“The flexibility of the Martin Act and its utility in the battle against criminal fraud is marred by its overly lenient penalties,” Vance said in the speech, titled “White Collar Crime in 2011: The Martin Act, Cybercrime and Beyond.”.

The Martin Act was wielded by Eliot Spitzer and Andrew Cuomo when they served as attorney general, against investment banks and the mutual-fund industry. Robert Morgenthau, Vance’s predecessor in the Manhattan DA’s office, used the law to prosecute white-collar crime.

Vance said he plans to make broader use the Martin Act in the coming year to prosecute investment frauds and Ponzi schemes involving investment funds; fraud schemes that target broker- dealers; the manipulation of commodities and commodities futures and insider trading in securities and commodities.

He said he wants penalties to conform to larceny statutes, which distinguish between $1,000, $3,000, $50,000 and $1 million thefts. He also wants to increase the time allowed to bring criminal charges.

 

Same Penalty

A high-level market manipulator who deprives the investing public of hundreds of millions of dollars is currently subject to the same penalty as a broker who fraudulently deprives one customer of $500, Vance said.

“In either case, a state court judge would be authorized to impose a non-incarceratory sentence,” Vance said in the speech.

The Martin Act, enacted in 1921, grants authority to investigate and prosecute, as the state’s Court of Appeals stated in 1926, “all deceitful practices contrary to the plain rules of common decency.” To violate the law, no sale or purchase is necessary if there are lies or deception in the offering of securities. Intent to defraud also is not required.

Vance said he isn’t the first Manhattan District Attorney to complain about the Martin Act, which in its original form lacked criminal provisions.

“It is said the Martin Act has teeth,” he quoted then- Manhattan District Attorney Joab Banton as saying in 1925. “It has, but they are an ill-fitting set of false teeth.”

 

Bank Of America has been ordered to stop all foreclosures in Nevada a non-judicial state.  The judge ruled they can only foreclose with a judges order, which is only for judicial state foreclosures.  The non-judicial states do not need court orders for foreclosing, the companies can simply foreclose after advertising the foreclosure for 4 weeks. The non-judicial foreclosure states will have law firms and companies which represent the banks and become the trustees for foreclosing.  In Nevada that firm seems to be ReconTrust, which handles the foreclosures for banks.

By a lawsuit going against ReconTrust who is handling foreclosures in Nevada for banks, hopefully all foreclosures will have to be stopped, not just Bank of America's foreclosures.

It is amazing how people think the foreclosure crisis is behind us and it is all straightened out, because MSM does not mention it anymore.  Yet there is more going on then ever before and more and more rulings FOR THE PEOPLE by judges.  Some judges still rule for the banks, but I would think in appeals, the correct ruling by law will have to be applied and thus it should be for the homeowner.  I linked a New Jersey ruling below, which was for the bank, yet it went against all laws and rights. 

 

Portion:

John Christian Barlow, a lawyer who represents North, said the lawsuit claims ReconTrust doesn’t have the authority to foreclose on homes in Nevada. Bank of America and other banks use ReconTrust to seize homes in Nevada, he said. Barlow said he will seek class-action, or group, status for the lawsuit.

 

In Tennessee and Arkansas I know it is a law firm named Wilson and Associates who become the trustee and substitute trustee to foreclose on people for the banks.

Every state is different and what is a shame is a judge in New Jersey is allowing foreclosures when the note is not available, which says who is owed the debt.    I certainly hope the people appeal this ruling by that judge.  As that goes against all laws and rules of foreclosures.

 

 

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Friday, January 28, 2011

Indications: U.S. stock futures steady after GDP report

Stock Assault 2.0 - Artificial Intelligence Stock Market Software

By Simon Kennedy and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures were little changed on Friday after the government reported a jump in consumer spending and exports that had the economy growing 3.2% in the final quarter of 2010.

The rise in GDP fell short of the 3.5% expected by many analysts, and stock-index futures pared their already mild gains after the data.

Futures for the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\h11 (DJH11 11,820, -124.00, -1.04%)  slipped 1 point at 11,943. S&P 500 futures /quotes/comstock/21m!f:sp\h11 (SPH11 1,280, -16.30, -1.26%)  were up nearly 1 point at 1,296.

Futures for the Nasdaq 100 /quotes/comstock/21m!f:nd\h11 (NDH11 2,276, -47.50, -2.04%)  rose 4.25 points at 2,327.75.

Asia's week ahead: Sony, Honda

Third-quarter earnings reports from Honda and Sony, as well as an interest-rate decision from Australia will be a focus for Asia next week. MarketWatch's Lisa Twaronite reports.

Most U.S. stocks closed higher on Thursday, but the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,854, -136.27, -1.14%)  again closed short of the elusive 12,000 level. The index hasn’t ended a session above 12,000 since June 19, 2008.

“When you consider the strength of the U.S. markets over the last two months, having risen a whopping 10% since the beginning of December, there comes a point when rising prices have to take a reality check,” said Simon Denham, head of spread betting firm Capital Spreads.

“Our clients are heavily short the indices, in particular the U.S. ones which have had the strongest run,” Denham added in an email.

Among stocks to watch, shares in Ford Motor Co. /quotes/comstock/13*!f/quotes/nls/f (F 16.09, -2.70, -14.37%)  slumped in premarket trading after the car maker reported adjusted earnings that missed Wall Street forecasts.

Amazon.com /quotes/comstock/15*!amzn/quotes/nls/amzn (AMZN 167.41, -17.04, -9.24%)  also dropped after the online bookseller’s operating margins fell short of market expectations. Read more on Amazon’s results.

Microsoft Corp. /quotes/comstock/15*!msft/quotes/nls/msft (MSFT 27.67, -1.20, -4.16%)  will also be in focus after the software giant posted a slight drop in quarterly profit, but said revenue rose 5% thanks to strong demand for its Kinetic videogame device and Office software. Read more on Microsoft’s latest figures.

Honeywell International Inc. /quotes/comstock/13*!hon/quotes/nls/hon (HON 54.84, -1.08, -1.93%)  said its fourth-quarter net income more than doubled to $369 million, or 47 cents a share, from $163 million, or 20 cents a share, in the year-ago period.

In international markets, the U.K.’s FTSE 100 index /quotes/comstock/23i!i:ukx (UK:UKX 5,881, -83.71, -1.40%)  fell 1% in midday trading as losses for mining stocks weighed on the index.

Asian markets closed mostly lower, with Japan’s Nikkei 225 average dropping 1.1% as the market had its first chance to react to Standard & Poor’s decision to downgrade Japanese sovereign debt.

Simon Kennedy is the City correspondent for MarketWatch in London. Kate Gibson is a reporter for MarketWatch, based in New York.

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Indications: Stock futures steady; Ford results disappoint

Stock Assault 2.0 - Artificial Intelligence Stock Market Software

By Simon Kennedy, MarketWatch

LONDON (MarketWatch) â€" U.S. stock futures held in a tight range Friday as investors waited on the sidelines ahead of figures on fourth-quarter economic growth, while Ford Motor Co. and Amazon.com both fell sharply in premarket trading.

Futures for the Dow Jones Industrial Average /quotes/comstock/21b!f:dj\h11 (DJH11 11,954, +10.00, +0.08%)  rose 6 points to 11,950 and S&P 500 futures /quotes/comstock/21m!f:sp\h11 (SPH11 1,297, +1.50, +0.12%)  were up 0.10 of a point at 1,295.90.

Futures for the Nasdaq 100 /quotes/comstock/21m!f:nd\h11 (NDH11 2,328, +4.50, +0.19%)  rose 1.25 points at 2,324.25.

Asia's week ahead: Sony, Honda

Third-quarter earnings reports from Honda and Sony, as well as an interest-rate decision from Australia will be a focus for Asia next week. MarketWatch's Lisa Twaronite reports.

Most U.S. stocks closed higher on Thursday, but the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 11,990, +4.39, +0.04%)  again closed short of the elusive 12,000 level. The index hasn’t ended a session above 12,000 since June 19, 2008.

“When you consider the strength of the U.S. markets over the last two months, having risen a whopping 10% since the beginning of December, there comes a point when rising prices have to take a reality check,” said Simon Denham, head of spread betting firm Capital Spreads.

“Our clients are heavily short the indices, in particular the U.S. ones which have had the strongest run,” Denham added in an email.

U.S. fourth-quarter gross domestic product will be announced at 8:30 a.m. Eastern time, with economists polled by MarketWatch expecting growth to accelerate to an annual rate of 3.5% from 2.6% in the third quarter.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 77.82, +0.10, +0.12%)  was virtually flat at 77.679 ahead of the data.

Among stocks to watch, shares in Ford /quotes/comstock/13*!f/quotes/nls/f (F 18.79, +0.42, +2.29%)  slumped 7.2% in premarket trading after the car maker reported adjusted earnings that missed Wall Street forecasts.

Amazon.com /quotes/comstock/15*!amzn/quotes/nls/amzn (AMZN 184.45, +9.06, +5.17%)  dropped 8.7% in premarket trading after the online bookseller’s operating margins fell short of market expectations. Read more on Amazon’s results.

Microsoft Corp. /quotes/comstock/15*!msft/quotes/nls/msft (MSFT 28.87, +0.09, +0.31%)  will also be in focus after the software giant posted a slight drop in quarterly profit, but said revenue rose 5% thanks to strong demand for its Kinetic videogame device and Office software. Read more on Microsoft’s latest figures.

Honeywell International Inc. /quotes/comstock/13*!hon/quotes/nls/hon (HON 55.92, +0.15, +0.27%)  said Friday its fourth-quarter net income more than doubled to $369 million, or 47 cents a share, from $163 million, or 20 cents a share, in the year-ago period.

Among companies still due to report earnings Friday, Dow component Chevron Corp. /quotes/comstock/13*!cvx/quotes/nls/cvx (CVX 94.75, +0.11, +0.12%)  is expected to post a profit of $2.35 a share for the fourth quarter.

In international markets, the U.K.’s FTSE 100 index /quotes/comstock/23i!i:ukx (UK:UKX 5,918, -47.58, -0.80%)  fell 1% in midday trading as losses for mining stocks weighed on the index.

Asian markets closed mostly lower, with Japan’s Nikkei 225 average dropping 1.1% as the market had its first chance to react to Standard & Poor’s decision to downgrade Japanese sovereign debt.

Simon Kennedy is the City correspondent for MarketWatch in London.

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NYSE Arca Morning Update - 08:30:00 ET

NYSE Arca Morning Update for Friday, Jan 28, 2011 :

STOCKS TRADING ON NYSE Arca AT A PRICE 15% OR MORE AWAY FROM
THE PREVIOUS TRADE DAY'S CONSOLIDATED CLOSE PRICE (AS OF 08:30:00 ET)

Stock Thursday's Close Current Price Pct Change Current NYSE ARCA Vol
TMRK $14.05 $19.12 36.1% 761,393
OPLK $19.33 $24.99 29.3% 800
OPNT $25.57 $29.86 16.8% 300
SVVS $26.57 $30.79 15.9% 19,565
INFN $8.97 $7.57 (15.6%) 24,922


10 MOST ACTIVE STOCKS ON NYSE ARCA AS OF 08:30:00 ET

BASED ON DOLLARS TRADED: | BASED ON SHARES TRADED:
Stock $ Volume Price PctChg | Stock Share Vol Price PctChg
F $118996271 $17.72 ( 5.8%) | F 6,772,866 $17.72 ( 5.8%)
SPY $92,027,515 $130.01 0.0% | C 2,299,325 $4.84 0.4%
AMZN $24,492,435 $170.14 ( 7.8%) | TMRK 761,393 $19.12 36.1%
GM $16,225,543 $37.75 ( 2.4%) | BAC 716,832 $13.78 0.8%
TMRK $14,562,001 $19.12 36.1% | SPY 707,856 $130.01 0.0%
C $11,120,260 $4.84 0.4% | GM 428,427 $37.75 ( 2.4%)
BHP $10,448,058 $88.03 ( 1.5%) | SLE 297,140 $17.67 0.1%
BAC $9,863,450 $13.78 0.8% | BP 179,895 $46.40 ( 0.6%)
BP $8,320,281 $46.40 ( 0.6%) | DAR 175,550 $13.03 0.4%
EWZ $6,448,325 $74.20 0.1% | MSFT 156,727 $28.83 ( 0.2%)


Price changes may be affected by symbol splits and dividends.

Consolidated close price is the last print (excluding prints with trade
conditions) prior to 4PM ET.

This information is also updated on our web page every morning at 8:35ET:
http://www.tradearca.com/data/volume/daily_update.asp

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Copyright [2011] by NYSE Euronext. All rights reserved. Reproduction and redistribution prohibited without prior express consent.

Thursday, January 27, 2011

Indications: Stock futures edge down as jobless claims jump

Stock Assault 2.0 - Artificial Intelligence Stock Market Software

By Barbara Kollmeyer, MarketWatch

NEW YORK (MarketWatch) â€" U.S. stock futures lost early gains on Thursday, after the Labor Department reported a bigger-than-expected increase in weekly jobless claims.

A downgrade of Japan’s sovereign debt was also in the spotlight.

Futures for the Dow Jones Industrial Average fell 6 points to 11,930, while those for the S&P 500 index were down 2.3 points at 1,291.40.

Futures for the Nasdaq 100 were little changed at 2,319.

Fed keeps cheap money flowing

At their first policy-setting meeting of 2011, central bank officials vote unanimously to continue buying government bonds to boost the recovery.

The Dow Industrials /quotes/comstock/10w!i:dji/delayed (DJIA 11,986, +0.57, +0.00%) topped 12,000 on an intraday-level basis for the first time in over two years on Wednesday, in the wake of positive housing data and President Obama’s State of the Union address.

The Dow finished up 0.1% to 11,985.44.

Analysts said investors will be waiting to see if the Dow retests that key 12,000 level on Thursday, amid a heavy schedule of data and earnings.

Jobless claims jumped by 51,000 to 454,000 last week, partly because poor weather caused administrative backlogs in four Southern states. Economists polled by MarketWatch had expected claims to rise to 408,000 from a revised 403,000 the week before.

Separately, orders for U.S.-made durable goods sank 2.5% in December, against expectations for 1% increase. Excluding transportation, orders rose 0.5%

Data on pending home sales are due at 10 a.m. Eastern.

Thursday’s data, however, were taken in the context of broadly positive economic reports recently, according to Jennifer Lee, senior economist at BMO Capital Markets.

“The economy continues to grow, and that view hasn’t changed despite some volatile data seen today,” she wrote in a note.

Bullish investors are also hoping for more of the same from tomorrow’s estimate of U.S. growth in the fourth quarter.

The earnings schedule was also heavy, with stocks reacting in preopen trades on results released on Thursday, and after the close of markets on Wednesday.

Caterpillar Inc. /quotes/comstock/13*!cat/quotes/nls/cat (CAT 96.91, +1.16, +1.21%)  shares rose 1.7% after it said profit reached $968 million, or $1.47 a share, from $232 million, or 36 cents a share, in the year-ago period.

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Indications: Stock futures trade in tight range ahead of data

Stock Assault 2.0 - Artificial Intelligence Stock Market Software

By Barbara Kollmeyer, MarketWatch

LONDON (MarketWatch) â€" U.S. stock futures were trading in a narrow range Thursday as a heavy schedule of earnings began to roll in and investors awaited economic data such as weekly jobless claims. A downgrade of Japan’s sovereign debt was also in the spotlight.

Futures for the Dow Jones Industrial Average rose 6 points to 11,942, while those for the S&P 500 fell 0.5 points to 1,293.10. Futures for the Nasdaq 100 rose 2.5 points to 2,320.75.

Fed keeps cheap money flowing

At their first policy-setting meeting of 2011, central bank officials vote unanimously to continue buying government bonds to boost the recovery.

The Dow Industrials /quotes/comstock/10w!i:dji/delayed (DJIA 11,985, +8.25, +0.07%) topped 12,000 on an intraday-level basis for the first time in over two years on Wednesday, in the wake of positive housing data and President Obama’s State of the Union address.

The Dow finished up 0.1% to 11,985.44.

Analysts said investors will be waiting to see if the Dow retests that key 12,000 level on Thursday, amid a heavy schedule of data and earnings.

Among data on tap, weekly jobless claims and December durable-goods orders are due at 8:30 a.m. Eastern time. Pending home sales are due at 10 a.m. Eastern.

“Recent economic indicators from the U.S. have been broadly positive, with even the housing market receiving a boost with yesterday’s new-home-sales data, and the bulls will be hoping for more of the same ahead of tomorrow’s key GDP figures,” said Anthony Grech, head of research at IG Index, in emailed comments.

The earnings schedule was also heavy, with stocks reacting in preopen trades on results released on Thursday, and after the close of markets on Wednesday.

Caterpillar Inc. /quotes/comstock/13*!cat/quotes/nls/cat (CAT 95.75, +1.36, +1.44%)  shares advanced after it said profit reached $968 million, or $1.47 a share, from $232 million, or 36 cents a share, in the year-ago period.

Shares of Netflix,Inc. /quotes/comstock/15*!nflx/quotes/nls/nflx (NFLX 183.03, -3.71, -1.99%) jumped 12% in preopening trade after overnight posting a 52% fourth-quarter profit rise and first-quarter forecast that was above expectations.

Shares of Nokia Oyj /quotes/comstock/13*!nok/quotes/nls/nok (NOK 10.73, +0.14, +1.32%)  fell 6.5% in premarket action after issuing a weak profit outlook for its handset division and a 16% fall in fourth-quarter profit. See story on Nokia.

Shares of Qualcomm Inc. /quotes/comstock/15*!qcom/quotes/nls/qcom (QCOM 51.86, +0.34, +0.66%)  rose 5% in preopening trade after late Wednesday posting a nearly 40% rise in quarterly earnings, shooting past Wall Street forecasts.

Shares of AstraZenca PLC /quotes/comstock/13*!azn/quotes/nls/azn (AZN 48.59, +0.44, +0.91%)  were up 2.7% in preopen trade after reporting its fourth-quarter net profit rose 4.4%, while revenue fell 3.7%.

Shares of Potash Corp. of Saskatchewan Inc. /quotes/comstock/13*!pot/quotes/nls/pot (POT 168.62, +5.69, +3.49%)  rose 3% in preopen trading after reporting fourth-quarter earnings of $1.61 per share, more than doubling that of a year ago, as sales jumped 64% to $1.81 billion.

Also reporting, Eli Lilly and Co. /quotes/comstock/13*!lly/quotes/nls/lly (LLY 34.95, +0.22, +0.63%)  said fourth-quarter net profit rose 28% on a 4% rise in revenue. It sees earnings per share for 2011 at $3.92 to $4.07 on a reported basis.

Lockheed Martin Corp. /quotes/comstock/13*!lmt/quotes/nls/lmt (LMT 78.39, -0.68, -0.86%)  reported a 19% rise in fourth-quarter profit on a sales gain of 4.8%, and forecast revenue in a range of $45.75 billion to $47.25 billion, and earnings from continuing operations of between $6.70 and $7.00 a share.

Procter & Gamble Co. /quotes/comstock/13*!pg/quotes/nls/pg (PG 66.11, -0.59, -0.88%)  reported sales rose 2% and operating net income of $1.11 a share, and also affirmed its profit outlook.

After the market close, Microsoft Corp. /quotes/comstock/15*!msft/quotes/nls/msft (MSFT 28.78, +0.33, +1.16%)  and Amazon.com Inc. /quotes/comstock/15*!amzn/quotes/nls/amzn (AMZN 175.39, -1.31, -0.74%)  will report, among others.

In Asia overnight, focus was on Japan where Standard & Poor’s cut Japan’s long-term debt rating to AA minus from AA, citing high fiscal deficit woes for the country. The dollar jumped against the yen after the announcement, which came after the close of Tokyo stock markets. See story on S&P’s downgrade of Japan.

The dollar was last up 1.1% to ¥83.03.

In Shanghai, stocks advanced, with resource stocks offsetting a fall in property developers after China introduced new measures to combat rising home prices.

In Europe, stocks were higher for a second day, with gains for miners compensating for a handful of weak corporate results. Shares of Novartis AG /quotes/comstock/13*!nvs/quotes/nls/nvs (NVS 57.94, +0.14, +0.24%) fell in Switzerland after it warned of a difficult 2011 on patent expiries and drug-price cuts in the U.S. See European Markets.

Gold futures for February delivery rose 40 cents to $1,333.40 an ounce.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.

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NYSE Arca Morning Update - 08:30:00 ET

NYSE Arca Morning Update for Thursday, Jan 27, 2011 :

STOCKS TRADING ON NYSE Arca AT A PRICE 15% OR MORE AWAY FROM
THE PREVIOUS TRADE DAY'S CONSOLIDATED CLOSE PRICE (AS OF 08:30:00 ET)

Stock Wednesday's Close Current Price Pct Change Current NYSE ARCA Vol
QTM $3.57 $2.70 (24.4%) 113,800
FLWS $2.55 $3.10 21.6% 15,101
PSTI $4.20 $3.50 (16.7%) 425,160


10 MOST ACTIVE STOCKS ON NYSE ARCA AS OF 08:30:00 ET

BASED ON DOLLARS TRADED: | BASED ON SHARES TRADED:
Stock $ Volume Price PctChg | Stock Share Vol Price PctChg
SPY $65,354,658 $129.90 0.2% | NOK 2,103,102 $10.27 ( 4.2%)
MFE $41,036,657 $47.88 ( 0.1%) | MFE 856,777 $47.88 ( 0.1%)
NFLX $29,903,972 $207.54 13.4% | SPY 503,400 $129.90 0.2%
NOK $21,343,598 $10.27 ( 4.2%) | PSTI 425,160 $3.50 (16.7%)
CAT $18,898,899 $97.98 2.4% | C 309,527 $4.82 0.1%
GLD $10,589,680 $130.10 ( 0.8%) | T 257,852 $27.78 ( 3.3%)
BHP $10,388,918 $90.32 ( 0.3%) | MU 232,212 $10.26 3.2%
QCOM $9,890,790 $54.92 5.9% | EWJ 223,300 $11.05 ( 0.5%)
T $7,188,680 $27.78 ( 3.3%) | CAT 192,795 $97.98 2.4%
POT $6,641,654 $175.06 4.0% | QCOM 179,839 $54.92 5.9%


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Wednesday, January 26, 2011

A Decade Of Progress Wiped Out By Financial Policy

Stock Assault 2.0 - Artificial Intelligence Stock Market Software

There is nothing dumb about the financial media. They know exactly what they are doing. All they want to do is keep their jobs and in that process they sell out themselves, their families and friends, other people and their country. They know government statistics are bogus, but they won‘t report that, because if they did they will be discharged. There are two sets of alternative figures. One shows inflation at 6.75% and the other 8%. As we have reported before the PPI reflects 13-1/2% to 14%, so how can official inflation be 1.2%? If this is truly the case how can inflation be tame with food and energy prices going through the roof?

What we are seeing are the results of QE1 and QE2 in the form of growing inflation. This is our gift from chairman Ben Bernanke. The recovery he envisions can only be translated into some kind of temporary relief, which is the product of monetary distortion, not recovery. In addition observers see higher sales, but never factor in the growth of inflation. That is why the CPI figures are distorted as much as they are officially by government. This year will be a classic inflation year with prices rising in all sectors. We see current inflation at 6-3/4% and by the end of the year that should be 14%. If you refer back to CPI -U it is 6.2%, the CPI-W 7.8% and the 1980 SGS of 8.9% you can see 14% is a very tame number. If we have to guess in December the official CPI will beat 5-1/2%.

In November of 2004 we predicted housing starts would fall 75% during the coming housing correction, up from 70% during the 1989-92 correction. Thus far the correction is just under 80%. During this past final quarter of 2010 starts fell at a more accelerated pace, which does not auger well for the economy. This slowing will present a formidable headwind for recovery. In 2011 and 2012 we see house prices falling 20%. The promiscuous lending and syndication of mortgages that has so ruined lenders balance sheets will be with us for years to come unless, of course, they do the right thing and declare bankruptcy. Much the same has happened in parts of Europe and is presently occurring in Asia, particularly in China. Monetary and then price inflation has taken hold worldwide because almost all governments have been using the same Keynesian policies. No country will escape the deflationary depression, which is on the way. There will just be degrees of misery.

QE1 and QE2 can be credited for the most part with today’s and the coming inflation. What is deeply disturbing is that the Fed, Treasury and most economists know that throwing money and credit at the problem is not going to work. Is the Fed just hoping that it will work, just this one time, or are they being deliberately destructive? We believe it is deliberate. You make your own choice. The food riots we see worldwide will worsen and in some countries revolution will follow. You will see more of what you just saw in Tunisia, where the president’s wife flees the country due to the upheaval and doesn’t forget to take 1-1/2 tons of gold with her. Upward pressure on prices is caused in part by growing populations of what the Bilderbergers call useless eaters. It is surprising these elitists haven’t as yet begun WWIII. That would help solve that problem.

QE1 was to save the financial sectors in the US, UK and Europe. QE2 is to save the US government. Very little if any of these funds have benefited the public. The direct affect of these rescues is much higher inflation. Unemployment has only fallen from 22-5/8% to 22-1/4% over the past three months. December saw a great acceleration in inflation and that will carry forward for at least two years, as QE3 becomes reality. Real GDP growth is minus 1-1/2% and even with QE2 it will only be 2% to 2-1/4% at a cost of another $2.5 trillion. M3 is down 2-1/2% to 3%, but don’t be deceived there are other ways to increase money and credit. The path of QE2 and then QE3 will lead to hyperinflation. How soon we don’t know, but you can plan on it coming. That is why gold and silver related assets are so important; they are your only refuge.

In order to keep the system from collapsing we have zero interest rates and quantitative easing. This may prolong the agony for the elitists, but it also causes higher inflation. One of the subscribers says she went to a swap meet and there were no bargains. Purchasing power is falling every day.

As an overview of last weeks Hollywood theatrics at the White House between a Chinese dictator in serious trouble and an illegal alien who desperately wanted higher poll numbers. The real meetings were in secret and the rest was a stage play, which included smoke and mirrors. Our sources tell us all over China there are demonstrations and riots, over 35% inflation and a demand for higher wages. That country is in deep trouble as the housing bubble bursts and the stock market falls. Periodically bank reserve ratios are raised, but they have not delivered the desired results. We see the Chinese economy slowing over the next few years as the world economy slows. That could cause 40 million people to be unemployed. They have built whole cities that are empty. They were simply make-work projects. That means the US and other economies will be negatively affected as well. China has serious problems that in time will lead to the sale of US dollars on a major basis.

2011 is going to be a year to remember. It could be the beginning of a major collapse - that is without an untoward event taking place. Almost everything the US and Europe have attempted has not worked. Could it be another Lehman Bros. or Bear Stearns, or a major bank going under? We will see the fall in financial stocks that we have been awaiting for, so long.

The social and political climate has changed over the past few years. We see demonstrations and riots in Europe, Africa and Asia. The international system cannot respond as strongly as it did just a few years ago. The cry by Bilderberg-type governments is that the people must make the banks whole. The people didn’t gamble in international markets, the banks did, but the people are still forced to pay for their mistakes. As we found out with the court forced exposure by the Fed that the fed has poured trillions of dollars in financial entities in the US, and Europe to make it look like they were solvent, when in fact they were all insolvent and still are bankrupt. Citizens are finally realizing that the banks are the problem and that they are being forced to bail them out. The result has been a reduction in world commerce, that is about to worsen, systemic high unemployment that nothing is being done to address and as a result there are socio-economic problems in many cou ntries worldwide. In America they have 44 million people on food stamps and 15.7% of the population already living below the poverty level. What would that figure be like if there were no food stamps or extended unemployment benefits? Would it be 20% or 25%? We don’t know, but we do know that empty bellies bring on revolutions. Tens of millions of Americans, Europeans and British are living on the edge. The world financial situation is out of control and those in charge, who caused it, do not know how to fix it. All of the fundamental imbalances are still there and for the most part are not being addressed. Nations and peoples have been warned. The system is broken and cannot be fixed. Keep your eyes on Ireland late in February, it could provide the catalyst for a new round of defaults and the breakup of the euro zone. In many countries retirees have had their social benefits frozen or cut and inflation is eating them alive. Politicians and elitists just turn their backs o n the problem, as the rich spend with wild abandon. It reminds us of 1788 France just before the revolution. Deliberate blindness won’t solve the problem â€" it only makes it worse. The time is fast approaching when all these problems will bubble up and explode. It is only a matter of when. The elitists should remember that a collapse of the world banking system threatens their hold on financial and political power and that failure will include their unmasking, which will bring on the wrath of the mobs.

As they have many times before elitists have gone a step too far. They miscalculated in June of 2003, the point of no return. The Talk radio beamed all over the world and the internet would inform all who were willing to listen that trouble was on the way and who caused it and why. Recent moves behind the scenes, like those of the Rothschilds that they have some serious problems. They seem to think we do not know what they are up to, but we do know what they are doing and we will do everything possible to thwart their efforts. Perhaps that is why they are subscribers. Their efforts to keep people separated will fail. It will be difficult for everyone but in the end we will have learned a good lesson.

Increases in money and credit affect an economy like increases in oil prices. It will take a year to two years for the full impact to be realized. It is like all the price inflation that is in the pipeline. Yes, we have the deflationary undertow, but remember the Fed and other central banks have to create far more inflation than they need, because if they do not and deflation takes hold the whole game is over. The wealth affect created by stimulus one and now two and QE1 and QE2 are about to take their toll in the form of higher inflation. It is not just food and energy everything will be affected. One sure sign of this is that gold bullion sales machines are starting to appear all over the world. Then the question arises will the Fed go for QE3 with real inflation abounding? Of course they would. They have no other way out.

Here is a government that spends 60% more than they have coming in via revenues. This year we do not have inventory buildup to help GDP and there are sure to be at least $50 billion cut from public spending. The dollar has fallen from 86 on the USDX to 78 over the past year. Exports are more competitive, what is left of them, but imports are more expensive and that is inflationary. This year the growth in business spending will probably be half of what it was in 2010. All these tax increases we see and the higher cost of goods will cut into consumption this year and 10% drop in the value of homes could also cut consumption by 1% of GDP. The increased cost of energy and food just at current levels will cut $100 billion from consumer spending on other items. States cannot spend money they do not have. There will be many bankruptcies, cuts in personnel and cuts in civic spending. Ten million are working part-time that will increase as well overall unemployment. Real wages hav e fallen for three of the past four months and that will continue as long as we have 30 million illegal aliens in the country and free trade, globalization, offshoring and outsourcing. GDP growth will be 2% to 2-1/4%, not 3% to 3-1/4%. On the plus side JPM says business lending is picking up. It rose $800 million over the past five weeks. In the US top corporations are holding $1.9 trillion in cash, but if they are unwilling to spend some of it the economy cannot recover. Then there is the issue of the additional $1.9 billion sitting in offshore accounts that major corporations want to bring to the US, but not at 35% taxation, but again at 5-1/4%. That is so they can buy stock in their companies on the stock market, which would drive the market higher and allow their officers to cash in their options and make billions. The hook of course is that part of those funds would supposedly be used to create jobs, and to buy Treasury and Agency securities, so that the Fed would not h ave to purchase as much. At best another temporary fix and little is really being spent to help the economy and unemployment. We may have extended unemployment for the next 20 years at the rate we are going.

As the above transpires consumers continue to pay down debt. They are taking out loans against equity in their homes, while there is still some equity left. Those types of loans by banks are four times more than commercial loans. Even that type of loan is slowing down. Money velocity is still moribund with M3 at about a minus 1% to 1-1/2%. QE has not improved employment or the economy, nor the real estate market. It has saved the financial sector in the US and Europe, funded Treasury and Agency debt and caused further speculation.

As a reflection of this mismanagement, inflation increases, as does the price of commodities, gold and silver. This saps consumer confidence and reduces spending. As the year progresses, thanks to the Fed and its owners - the major money center, legacy banks, the casino known as the market will hold firm. The stock and bond markets are the only two sectors that have not as yet been ravaged. Once they fall the bottom falls out. That is why you have the manipulation you do. It happens in all corporatist fascist societies. Why do you think commodities and gold and silver are at or near up to 30 year highs.

We are still five months away from July 1st, the beginning of the new fiscal year for the states and already their plight is front-page news. The word is out that public servants now make twice as much as those in private industry. It once was just the opposite. Public employees are the haves and the taxpayers who foot the bill are the have-nots. What has happened over the past 40 years is that the groundwork has been laid for class warfare. Is it any wonder the states have staggering fiscal problems? Even Democrats, who have counted on public-employee unions for handouts and support, are striking a militant pose, as families pay ever-higher taxes to service people who make twice as much money as they do, often for half the work.

Last week saw the Dow up 0.7%, S&P down 0.8%, the Russell 2000 down 4.4% and the Nasdaq 100 off 2.4%. Banks fell 2.1%; broker/dealers 2.3%; cyclicals off 2.3%; transports off 3.6%; consumers off 0.1%; utilities off 1.4%; high tech off 2.5%; semis off 4.6%; Internets off 4% and biotechs off 2.1%. Gold bullion fell $19.00, the HUI gold index slid 2.2% and the USDX off 1.3% to 78.12.

Two year-T-bill yields rose 3 bps to 0.585%, the 10-year T-note rose 8 bps to 3.41% and the 10-year German bund rose 15 bps to 3.17%.

The 30-year fixed rate mortgage rose 3 bps to 4.74%, the 15’s fell 3 bps, the one-year ARMs rose 2 bps to 3.25% and the 30-year fixed rate jumbos fell 11 bps to 5.50%.

Fed credit declined $16.1 billion, but it is still up 8.3% year-on-year. Fed foreign holdings of Treasury and Agency debt fell $7.3 billion. Custody holdings for foreign central bank yoy rose $397 billion, or 13.5%.

M2 narrow money supply rose $6.9 billion to $8.815 trillion, yoy it rose 4%.

Total money market fund assets fell $35.1 billion to $2.761 trillion.

Safety deposit box holders and depositors are not given advanced notice when failed banks shut their doors.

If people have their emergency money in a safe deposit box or an account in a bank that closes, they will not be allowed into the bank to get it out. They can knock on the door and beg to get in but the sheriff’s department or whoever is handling the closure will simply say “no” because they are just following orders.

Deposit box and account holders are not warned of the hazards of banking when they sign up. It is not until they need to get their cash or valuables out in a hurry that they find themselves in trouble.

Rules governing access to safe deposit boxes and money held in accounts are written into the charter of each bank. The charter is the statement of policy under which the bank is allowed by the government to do business. These rules are subject to change at any time by faceless bureaucrats who are answerable to no one. They can be changed without notice, without the agreement of the people, and against their will. People can complain but no one will care because this is small potatoes compared to the complaints that will be voiced when the executive order that governs national emergencies is enforced.

That order allows the suspension of habeus corpus and all rights guaranteed under the Bill of Rights.

A look at the fine print of the contract signed when a safety deposit box is opened reveals that in essence the signer has given to the bank whatever property he has put into that deposit box. When times are good people will be allowed open access to their safe deposit box and the property that is in it. This also applies to their bank accounts.

But when times get really bad, many may find that the funds they have placed on deposit and the property they thought was secured in the safe deposit box now belong to the bank, not to them. Although this was probably not explained to them when they signed their signature card, this is what they were agreeing to.

During the Great Depression in the early 1930’s people thought that many banks were going to fail. They were afraid they would lose their money so they went in mass to take it out, in what is known as a run on the banks. The government closed the banks to protect them from angry depositors who wanted their money back. Throughout history, governments have acted to protect the interests of banks and the wealthy people who own them, not the interests of depositors or box holders.

In a time of emergency, people will have no recourse if access to their safe deposit box and bank accounts is denied. If they are keeping money in a bank that would be needed in an emergency or in a time when credit is no longer free flowing, they may not be able to get it out of the bank. The emergency may occur at night or on a weekend or holiday when the bank is closed.

The solution is to take emergency cash or valuables out of the safe deposit box or bank account and secure them somewhere else, like in a home safe. An even better idea may be to close the safe deposit box account completely, letting someone else entertain the illusion of safety.

Americans have learned a few things since the Great Depression. They now have the FDIC to liquidate any failed banks.

The FDIC promises to set up a series of dates and times when safe deposit box renters can access their boxes by appointment to remove their property and surrender their keys. The FDIC also promises to mail bank customers an announcement of the dates for such events and include a question and answer page that addresses safe deposit box access.

The people have the FDIC to give them back the money they had on deposit that they were unable to get out of any failed bank that carries FDIC insurance. Sheila Bair, head of the FDIC, promises that depositor’s money will be available in 24 hours or less. But people should remember that the FDIC is just another bureaucracy, and it`s probably best not to rely on a bureaucracy in an emergency.

 

January 2006:

U.S DEPARTMENT OF HOMELAND SECURITY HAS TOLD BANKS - IN WRITING - IT MAY INSPECT SAFE DEPOSIT BOXES WITHOUT WARRANT AND SIEZE ANY GOLD, SILVER GUNS OR OTHER VALUABLES IT FINDS INSIDE THOSE BOXES!

According to in-house memos now circulating, the DHS has issued orders to banks across America which announce to them that "under the Patriot Act" the DHS has the absolute right to seize, without any warrant whatsoever, any and all customer bank accounts, to make "periodic and unannounced" visits to any bank to open and inspect the contents of "selected safe deposit boxes."

Further, the DHS "shall, at the discretion of the agent supervising the search, remove, photograph or seize as evidence" any of the following items"bar gold, gold coins, firearms of any kind unless manufactured prior to 1878, documents such as passports or foreign bank account records, pornography or any material that, in the opinion of the agent, shall be deemed of to be of a contraband nature."

DHS memos also state that banks are informed that any bank employee, on any level, that releases "improper" "classified DHS Security information" to any member of the public, to include the customers whose boxes have been clandestinely opened and inspected and "any other party, to include members of the media" and further "that the posting of any such information on the internet will be grounds for the immediate termination of the said employee or employees and their prosecution under the Patriot Act."In Vermont, state senator Virginia Lyons on Friday presented an anti-corporate personhood resolution for passage in the Vermont legislature. The resolution, the first of its kind, proposes "an amendment to the United States Constitution ... which provides that corporations are not persons under the laws of the United States. "The profits and institutional survival of large corporations are often in direct conflict with the essential needs and rights of human beings."

Corporations "have used their so-called rights to successfully seek the judicial reversal of democratically enacted laws.”

Thus the unfolding of the obvious: “democratically elected governments” are rendered “ineffective in protecting their citizens against corporate harm to the environment, health, workers, independent business, and local and regional economies."

`The resolution goes on to note that "large corporations own most of America's mass media and employ those media to loudly express the corporate political agenda and to convince Americans that the primary role of human beings is that of consumer rather than sovereign citizens with democratic rights and responsibilities."

Denouncing this situation as an "intolerable societal reality," the document concludes that the "only way" toward a solution is the amendment of the Constitution "to define persons as human beings.”

Resolution Calling to Amend the Constitution Banning Corporate Personhood Introduced in Vermont | News & Politics | AlterNet

http://www.alternet.org/news/149620/resolution_calling_to_amend_the_constitution_banning_corporate_personhood_introduced_in_vermont?page=entire

 The Great Recession wiped out what amounts to every U.S. job created in the 21st century. But even if the recession had never happened, if the economy had simply treaded water, the United States would have entered 2010 with 15 million fewer jobs than economists say it should have.A recent paper by researchers at the Asian Development Bank Institute concluded that the iPhone, one of the United States’ top innovations of the past decade, actually contributes nearly $2 billion to our trade deficit because it is almost entirely produced and assembled in Asia. The paper also raises a conundrum for lawmakers and business leaders alike: If Apple moved its assembly line to the United States and created domestic jobs but didn’t raise the cost of the iPhone, the company would still turn a 50 percent profit on every one it sold.

California jobless rate ticks up to 12.5% California adds just 4,900 jobs in December, with the government and construction sectors shedding thousands of positions. L.A. County's unemployment rate hits 13%. The Employment Development Department said Friday, after adding 30,500 the month before.

The Phantom 15 Million

Taming unemployment starts with solving the mystery of the jobs that were supposed to have been created in the past 10 years but weren’t. Somehow, rapid advancements in technology and the opening of new international markets paid dividends for American companies but not for American workers.

In other words, American companies had adopted a more cold-blooded attitude toward recessions, one that fit the new model of globalization and automation. Technology made it easier to lay off your 100 least-effective workers and ship their jobs to India, or to replace them with a software program that made your remaining workforce dramatically more productive.

Mounting evidence suggests that educational stagnation has already socked American workers, particularly men. Businesses aren’t investing in American workers, either. The major productivity gains of the fledgling recovery came largely from companies producing more with fewer employees.

The simple truth is that American firms are either returning the spoils of globalization and technology to their shareholders, spending them on new projects abroad, or both. “U.S. companies are investing in plants and equipment, just not in our borders. What if the Peterson Institute’s Kirkegaard is correct when he says, “There is a significant risk that we wander aimlessly into a situation where U.S. labor markets end up becoming much more European than they were before,” less dynamic, less innovative, with persistently higher unemployment. “That’s not a description that I use lightly,” he says, “because that’s a very, very bad outcome.”

Payrolls decreased in 35 U.S. states in December, while the unemployment rate rose in 20, showing the labor market recovery is slow to gather momentum.

New York led the nation with 22,800 job cuts last month, followed by Minnesota with 22,400 firings, and Florida with 17,900, figures from the Labor Department showed today in Washington.

The report is consistent with figures on Jan. 7 that showed a fewer-than-forecast 103,000 jobs were created nationwide last month even as unemployment fell. Federal Reserve policy makers meeting today and tomorrow are likely to reiterate a pledge to buy $600 billion in government securities through June to help lower unemployment and spur growth.

“In spite of the fact that the economy is improving, there is not enough momentum to make a significant dent in the unemployment rate,” Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts, said before the report. “We really need two or three months of big numbers.”

Joblessness increased most in West Virginia, where it rose by 0.3 percentage point, followed by Colorado, Georgia and Nevada, which showed increases of 0.2 percentage point each. Nevada also faced the highest jobless rate in the country at 14.5 percent.

After Nevada, the jobless rate was highest in California at 12.5 percent and Florida at 12 percent, today’s report showed.

Joblessness in Michigan

Michigan, which is part of the so-called manufacturing Rust Belt, saw unemployment plunge by 0.7 percentage point, the biggest one-month decrease since records began in 1976 as about 37,000 people left the labor force. The jobless rate fell to 11.7 percent, the lowest level since January 2009.

The state, home to the nation’s biggest automakers, is seeing signs the industry is turning around. General Motors Co., the largest U.S. automaker, will add a third shift and about 750 jobs to its assembly plant in Flint, Michigan, to meet rising demand for pickups, Detroit-based GM said yesterday in a statement.

“Adding a third shift is a response to customer demand for heavy-duty pickups, which most people use to tow, haul and plow,” Mark Reuss, president of GM North America, said in the statement. “Equally importantly, it brings jobs and a needed economic boost to the Flint area.”

Unemployment in North Dakota, the lowest in the U.S., was 3.8 percent.

Payrolls Nationally

The Labor Department’s national report for December showed private payrolls, which exclude government agencies, rose by 113,000 last month after a 79,000 November gain. For all of 2010, about 1.1 million jobs were created, the most since 2006. The economy lost 8.4 million jobs during the recession that began in December 2007 and ended in June 2009. At the pace of improvement projected by Fed officials, “it could take four to five more years for the job market to normalize fully,” Feb Chairman Ben S. Bernanke said Jan. 7 in testimony to the Senate Budget Committee after the jobs report.

The workforce, those with jobs or looking for work, shrank by 260,000 workers last month, sending the share of the population in the labor force down to a 26-year low of 64.3 percent, the Labor Department’s national report showed Jan. 7.

Unemployment stuck above 9 percent is one reason why President Barack Obama last month signed an $858 billion bill extending all Bush-era tax cuts for two years. The bill also continues expanded unemployment insurance benefits through 2011 and cuts payrolls taxes by 2 percentage points.

State and local employment data are derived independently from the national statistics, which are typically released on the first Friday of every month. The state figures are subject to larger sampling errors because they come from smaller surveys, making the national figures more reliable, according to the government’s Bureau of Labor Statistics.

 Many workers at the Metropolitan Water Reclamation District are collecting hundreds of thousands of dollars in severance pay despite leaving their jobs voluntarily.

The board is now trying change the decades old practice of awarding almost every employee severance pay. However, the department's 2,000 workers won't give up the perk without a fight.

Some workers are suing the Metropolitan Water Reclamation District, complaining that it's not fair that a very expensive and uncommon perk has been yanked out from under them. So two months ago, the board voted to eliminate severance pay beginning Jan. 1. That led to a very expensive stampede out the door, as 74 veteran employees quit or retired in the last few weeks of the year, before the perk vanished.

 

Alan Abelson cites a Merrill Lynch report that warns that wage inflation in China, which Trichet and Bernanke must ignore to continue to keep their big banks and governments afloat, means China will no longer export deflation and might start exporting inflation.

In the latest Canton Fair in October-November 2010, the analysts report, export prices were hiked 3%- 5% (in dollar terms) from those exacted from foreign buyers at the same fair held in the spring, while labor-intensive goods apparel, shoes, luggage were boosted an immodest 10%-20% migrant workers who got an 18.7% raise in wages in the first three quarters of last year, and the shrinkage of the supply of rural surplus workers younger than 40, which had provided a steady flow of cheap labor. Rising paychecks also have lifted food prices, which account for about 75% of the rise in the country's [CPI]. This switch on the part of the Chinese from a disinflationary or even deflationary role to an inflation generator in the world economy at the very least is going to stoke inflation and exert upward pressure on interest rates pretty much everywhere, including our fair land.

 

Concerns that the Federal Reserve could suffer losses on its massive bond holdings may have driven the central bank to adopt a little-noticed accounting change with huge implications: it makes insolvency much less likely.

 

The significant shift was tucked quietly into the Fed's weekly report on its balance sheet and phrased in such technical terms that it was not even reported by financial media when originally announced on Jan. 6.

But the new rules have slowly begun to catch the attention of market analysts. Many are at once surprised that the Fed can set its own guidelines, and also relieved that the remote but dangerous possibility that the world's most powerful central bank might need to ask the U.S. Treasury or its member banks for money is now more likely to be averted. "Could the Fed go broke? The answer to this question was 'Yes,' but is now 'No,'" said Raymond Stone, managing director at Stone & McCarthy in Princeton, New Jersey. "An accounting methodology change at the central bank will allow the Fed to incur losses, even substantial losses, without eroding its capital."

The change essentially allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital. It would then simply direct future profits from Fed operations toward that liability.

This enhances transparency by providing clearer, more frequent, snapshots of the central bank's finances, analysts say. The bonus: the number can now turn negative without affecting the central bank's underlying financial condition.

"Any future losses the Fed may incur will now show up as a negative liability as opposed to a reduction in Fed capital, thereby making a negative capital situation technically impossible," said Brian Smedley, a rates strategist at Bank of America-Merrill Lynch and a former New York Fed staffer.

"The timing of the change is not coincidental, as politicians and market participants alike have expressed concerns since the announcement (of a second round of asset buys) about the possibility of Fed 'insolvency' in a scenario where interest rates rise significantly," Smedley and his colleague Priya Misra wrote in a research note.

 

Concerns that the Federal Reserve could suffer losses on its massive bond holdings may have driven the central bank to adopt a little-noticed accounting change with huge implications: it makes insolvency much less likely.

The change essentially allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital. It would then simply direct future profits from Fed operations toward that liability.

Now, there is no pretense that US taxpayers are on the hook for all Ben’s QE and other schemes, scams and follies. We think Congress will have much more to say about this in coming weeks.

 

The Federal Reserve on Wednesday reluctantly opened the books on its monumental campaign to save the financial system in the midst of the recent crisis, revealing how it distributed some $3.3 trillion in relief.

The data revealed that the Fed's aid was scattered much more widely than previously understood. Two European megabanks Deutsche Bank and Credit Suisse were the largest beneficiaries of the Fed's purchase of mortgage-backed securities (also known as "toxic derivatives" - ed.)

The Fed's dollars also flowed to major American companies that are not financial players, including McDonald's and Harley-Davidson, through unsecured short-term loans. The measure, initiated in Jan. 2009 to stimulate the flow of credit and keep household borrowing costs low, led the nation's central bank to purchase more than $1.1 trillion in mortgages packaged into the form of securities. The mortgage bonds are backed by Fannie Mae and Freddie Mac, the twin mortgage giants now owned by taxpayers.

Deutsche Bank, a German lender, has sold the Fed more than $290 billion worth of mortgage securities, Fed data through July shows. Credit Suisse, a Swiss bank, sold the Fed more than $287 billion in mortgage bonds.

The data had previously been secret. It was released Wednesday per the recently-enacted law overhauling the federal financial regulation. The Fed, ferociously backed by the Obama administration, fought lawmakers' desire for full disclosure throughout the financial reform debate.

 

Bernanke is rooting for higher stock prices. Ben Bernanke is recommending that investors load up on stocks, particularly small caps. Really. I’m serious. He did it on Thursday on CNBC in a brief interview with Steve Liesman. Steve asked the Fed Chairman whether QE-2.0 isn’t working as planned given the backup in bond yields and the surge in commodity prices. Mr. Bernanke responded: “Policies have contributed to a stronger stock market just as they did in March ‘09, when we did the last iteration of this. The S&P 500 is up about 20%-plus and the Russell 2000, which is about small cap stocks, is up 30%-plus. So I think a stronger economy actually helps small business even more than it helps larger businesses.”

Given everything that has happened over the past two decades, it is totally bizarre to see the Fed Chairman extolling rational exuberance in the stock market given how quickly it can turn into irrational exuberance with such a powerful endorsement!

 

The US Securities and Exchange Commission has delivered subpoenas to the state treasurer’s office in a wide-ranging request for documents concerning dealings between investment banking giant Goldman Sachs and former treasurer Timothy P. Cahill, onetime top staff members, and former campaign aides, according to an official briefed on the document request.

The agency’s subpoenas, which seek e-mails, phone records, schedules, files, and memorandums, come just over a month after Goldman Sachs removed itself from two state bond deals in Massachusetts following the disclosure that a vice president at the firm, Neil Morrison, was active in Cahill’s 2010 gubernatorial campaign, which could violate federal securities regulations. Morrison had previously served as a top deputy to Cahill in the treasurer’s office.

 

John Crudele of the NY Post: Crack down on these tax scams, save $400M

Right now there is someone looking for an apartment in the Bronx from which he can file fake tax returns seeking large refunds he doesn't deserve. The place needs, above all else, Wi-Fi Internet access.

The renter will want to tap into a neighbor's Internet connection, so he'll probably have a laptop along when the realtor shows him places. This way the renter will be able to file dozens, if not hundreds, of tax returns from his apartment without leaving electronic footprints. The refunds will be sent to a variety of Post Office boxes, which will be disguised by using the word "suite" or "Apt" on the tax filing rather than the more suspicious "P.O. Box" tag.

This source adds that there is a refund mill filing for multiple New York state refunds out of a central New Jersey location with the help of a corrupt Brooklyn accountant. There have been few prosecutions, sources say. One of the main problems is that the IRS is besieged with tax fraud on the national level and the state mainly leaves policing of fraudulent tax returns up to local authorities. [Investigators believe the NY ring is mostly Middle Eastern nationals.]

 

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