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HRB up over a point after hours today, as high as 52.25 after closing at 50.82. I had shorted it 6 days ago when it was around 52.7 with the 55 Sept. puts.
Wondering if I may get another crack at it tomorrow...
-mike
Durable goods sure turned futures around...May get a nice bump to get some good shorts. We will soon see. CNBC is confused...lol so what's new! They will be talking DOW 10k again :)
STEVE...
Sorry..I clicked on a link on the investor hub page..
Thinking of too many other things..
I`m on track now & took L2 auto renewal..
Sorry for the mistakes...LOL...DON
topcard2.... I am perplexed !!
My site is http://www.twaves.com/
My subscription page is http://www.twaves.com/T-Waves_Subscription_Prices.htm
I Only have Level I & II subscriptions no life-time ?
Steve
Steve,
Subscribed to your newsletter today..the lifetime..was just wondering if that included the daily e-mails...Thanks, DON
The Debt To the Penny
Current Amount
08/23/2002 $6,206,496,269,305.09
Current
Month
08/22/2002 $6,204,506,147,068.71
08/21/2002 $6,195,860,088,809.28
08/20/2002 $6,198,881,278,266.14
08/19/2002 $6,195,779,296,107.99
08/16/2002 $6,193,272,924,133.45
08/15/2002 $6,193,056,143,650.08
08/14/2002 $6,162,050,564,438.14
08/13/2002 $6,164,529,911,859.03
08/12/2002 $6,162,108,583,400.04
08/09/2002 $6,161,175,202,672.18
08/08/2002 $6,159,773,600,947.54
08/07/2002 $6,150,811,787,179.89
08/06/2002 $6,151,671,997,592.87
08/05/2002 $6,148,395,980,810.85
08/02/2002 $6,148,756,499,131.98
08/01/2002 $6,158,782,145,887.11
Prior
Months
07/31/2002 $6,159,740,790,009.39
06/28/2002 $6,126,468,760,400.48
05/31/2002 $6,019,332,312,247.55
04/30/2002 $5,984,677,357,213.86
03/29/2002 $6,006,031,606,265.38
02/28/2002 $6,003,453,016,583.85
01/31/2002 $5,937,228,743,476.27
12/31/2001 $5,943,438,563,436.13
11/30/2001 $5,888,896,887,571.34
10/31/2001 $5,815,983,290,402.24
Prior Fiscal
Years
09/28/2001 $5,807,463,412,200.06
09/29/2000 $5,674,178,209,886.86
09/30/1999 $5,656,270,901,615.43
09/30/1998 $5,526,193,008,897.62
09/30/1997 $5,413,146,011,397.34
09/30/1996 $5,224,810,939,135.73
09/29/1995 $4,973,982,900,709.39
09/30/1994 $4,692,749,910,013.32
09/30/1993 $4,411,488,883,139.38
09/30/1992 $4,064,620,655,521.66
09/30/1991 $3,665,303,351,697.03
09/28/1990 $3,233,313,451,777.25
09/29/1989 $2,857,430,960,187.32
09/30/1988 $2,602,337,712,041.16
09/30/1987 $2,350,276,890,953.00
SOURCE: BUREAU OF THE PUBLIC DEBT
Looking for more historical information? Visit the Debt
Historical Information archives.
Updated August 26, 2002
http://www.publicdebt.treas.gov/
Folks I am going to issue another T-Waves GENERAL WARNING,
In my view the current deteriorating economic conditions, the threat of WAR on the horizon, increasing debt loads in consumer-land, corporate-land not to mention the ever increasing federal budget deficit…the contagion that increased energy cost will have…the likelihood of continued pressure on the global economic front from South America… increased and continued move towards excessive stock market valuations will push us deeply into the double dip recession that I have spoken so often about. When it was so unpopular to do so. I am issuing a broad based warning to all my readers…I believe that the current rally that so many talking-butt-heads and anal-heads have called the next bull run. Is about to implode…I believe it will suffer the same fate of the three previous Bear market rallies of the past two and a half years. At their peaks these moves registered gains of 14.2%, 21.7% and 24.6%. At Thursday's high the current rally had jumped 22.6% off the July 24 bottom, within the range of the previous three. In our view another interim top is likely in the period ahead, and the market will drop to new lows. Yes I know that more than 80% of the so-called market guru’s have stated that the bottom is in and that we will rally from here. However I do not believe so…and you folks read me for my opinions…not the hyped and popular opinions you find on CNBC etc. I hope this warning scares you…as my last warning came true enough! http://www.twaves.com/Archive%20Folder%20Pre-Market%20Updates/T-Waves_Pre-Market_Update%20%20%206-6....
Best of luck
Steve
Steve, found it this time. Thanks.
Hello Be Profitable yes I did...Please use your Private link...
If you have a problem email me
Steve
Steve, did you post your weekly turn schedules? Didn't see it in your emails and I couldn't locate it on your site. TIA
PENSION BLOWUP IS NEXT
By JOHN CRUDELE
--------------------------------------------------------------------------------
OLD FRIENDS:
Retirees, like the two men (above) at a Parkchester Senior Citizen's Center, may be worried that their companys may have underfunded pension funds.
- NYP: Bolivar Arellano
August 22, 2002 -- THE next big blow for corporations: underfunded pensions.
Here's what happened: Companies were just as stupid as everyone else during the stock market bubble and they became dependent on abnormally large investment gains to keep pension tills full.
But that trick isn't working anymore. And, according to an important new Merrill Lynch & Co. report, of the 346 companies in the S&P 500 index that have old-fashioned retirement plans, 82 percent were overfunded by just $1.1 billion at the end of last year.
That's an incredible drop from the $215 billion overfunding level at the end of 2000.
And, you guessed it, there may be no pension surplus at all after the woeful performance of the stock market this year.
Worse, the 346 companies were actually underfunded by an aggregate $245 billion at the end of 2001 when health care benefits to retirees were included in the calculations.
Health care and other post-retirement plans are not required by the government to be funded.
Merrill Lynch also calculated that earnings for the Standard & Poor's 500 companies would have been 6.1 percent lower in 2001 if the impact of pension funds, including interest costs and expected asset returns, were not included.
There are more than enough problems already weighing on corporate profits. The slipping economy, of course, is the most important. So is the issue of whether stock options should be expensed.
And there is still the little matter of whether corporate profits can be trusted in the first place.
Dozens of companies hedged on their certification filings last week, and that leaves open the possibility that more scandals might be coming.
Merrill Lynch says the companies with the greatest underfunding when health care costs were included are General Motors, Ford, Exxon Mobil, Delphi Automotive Systems, DuPont, SBC Communications, Boeing IBM, Philip Morris and AMR Corp.
Another batch of companies would be hard hit if the impact of pensions were not included in their profit statements. Companies whose earnings per share would fall 10 percent or more are BellSouth, Boeing, General Electric, IBM, Marsh & McLennan, SBC Communications and Con Edison.
*
Even though the Federal Reserve decided not to cut interest rates this month, it doesn't mean Alan Greenspan will sit idle if the economy weakens.
The Fed could - and probably will - start making massive repurchases of government securities. This is where the real Fed power lies.
As I said before, Greenspan has pretty much used up the benefits of lower interest rates after 11 cuts in two years. The Fed is virtually powerless in compelling people and companies to borrow money if they don't want to borrow.
Wall Street thinks more rate cuts will come later this year, perhaps as early as September - or even in between policy meetings.
Maybe yes, maybe no. But any further moves to reduce rates would be irrelevant and perhaps even counterproductive.
So instead, the Fed's next move could very well be to further liquefy the banking system. This is delicate stuff, because the financial markets here and abroad could be bothered if Greenspan looks as if he is not even paying lip service to inflation.
And with the Fed's pool of money already growing at a strong 8 percent a year, letting the presses at the mint run overtime is a problem.
The Fed repurchases government securities all the time as part of its regular operations. What the pros will be looking for are repurchases over and above those needed to keep interest rates where the Fed wants them.
*
The new definition of EBITDA: Earnings Before I Tricked Da Auditors.
*
How dead is the mergers and acquisitions business?
The hottest sector in the financial industry during the second quarter was thrifts, which are usually drop-dead boring. And Citigroup's $5.9 billion acquisition of Golden State Bancorp accounted for 10 percent of deals, according to SNL Financial.
That's up from just $2.7 billion in first-quarter deals and $34.6 billion in thrift acquisitions in the second quarter of 2001.
*
Rumors come up daily that the U.S. will attack Iraq, and I'm sure crazyman Saddam Hussein is glad to get the heads up. This week's rumor had something to do with the American government leasing ships - and it sent the price of crude oil temporarily higher.
Prudential Financial recently tried to give investors a warning on what to expect if there's a war - or, I guess you should say, another war.
The firm says that fear of conflicts like this usually hurts U.S. stock prices, but that the markets tend to hit a bottom at moments of maximum peril. And, it says, Wall Street typically pays more attention to the economy than to military action.
Here are two problems I see.
First, only in retrospect do you know when you've reached the period of maximum peril. And, second, if war with Iraq means more domestic terrorism, then watching the war will be just like watching the economy.
* Please send e-mail to:
jcrudele@nypost.com
Corporate debt saps nation
Credit stress hits Depression level
By Jennifer Beauprez
Denver Post Business Writer
Sunday, August 18, 2002 - U.S. corporate debt nearly doubled in the past five years - to $3.9 trillion by the month of May.
U.S. consumers spent that same amount on all services - from haircuts to dog grooming - during 2001.
The burden, already buckling many companies under the load, threatens to send the nation into a prolonged recession.
"We're looking at an economic heart attack in front of us," said John Riley, president of Cornerstone Investment Services, a money management firm in Providence, R.I. "We're faced with owning up to the excesses of the late 1990s."
In 1997, U.S. corporate debt - which includes bonds issued by companies to finance their activities as well as bank loans - was $2 trillion, according to the Bond Market Association.
Moody's Investor Research now says the nation is in the worst credit stress since the Great Depression of the 1930s.
The result, thus far: Forty-two companies defaulted on $46 billion in loans during the second quarter, breaking the record in dollars, according to a July report by Moody's.
The tally was double the volume during the same time last year. For the first half of this year, companies failed to pay $76.6 billion in loans, a 64 percent increase over the first half of 2001.
Moody's expects the defaults will keep rolling in through next summer but predicts the trend has already reached its peak.
Yet as those defaults keep coming, the economy will continue to feel the pain, quashing investor and lender confidence and slowing hiring, expansion and new investment elsewhere.
The fallout could even lead to higher monthly premiums on the average person's life, car or home insurance policy, said Mac Clouse, director of the University of Denver's Reiman School of Finance.
Why? Because life insurance companies, pension funds and investors buy bonds - which historically are safer than stocks - with the intent of earning interest on that debt. Insurance companies put 90 percent of their investments into the bond markets, which will inevitably suffer when companies can't make their payments.
"If there are a lot of claims and fewer dollars to pay the claims, the only way they can make that up is with higher premiums," Clouse said.
The companies that don't default and struggle to pay down their debt may still do harm to the economy with cutbacks. Experts say more layoffs, fewer services and little new hiring will result as companies preserve cash for debt payments.
"It's a bunch of dominoes that could collapse," said Mike Gasior, president of American Financial Service, which trains and consults for institutional investors. "All that money is going to have to be paid back."
But that wasn't the logic back in the heyday of the late 1990s.
Companies borrowed billions to grow as quickly as possible. Cable TV and telecommunications companies were the biggest borrowers in their pursuit of building the world's high-speed Internet and phone connections. Those plans collapsed with the economy.
Telecom companies accounted for 61 percent of loan defaults during the second quarter of this year, according to Moody's. Last year, pundits compared the telecom meltdown to the savings-and-loan crisis that cost U.S. taxpayers $150 billion a decade ago.
"There was a lot of momentum, and you had to keep up," said Clouse of DU. "Your stock price said you were a growth firm. That's what the market was expecting. So, well, you had to grow."
That growth was even more attractive because of low interest rates, tax-deductible interest and the wide availability of money.
Just as investors chased dot-coms, they also jumped at the chance to lend to growth companies, Gasior said.
"You could bring any debt deal to the market, and there was money to back it up," Gasior said. "It was the same hubris of the Internet stocks."
The 29 most indebted U.S. companies, not counting financial companies, piled on $446 billion in debt over the past five years, Denver Post research shows.
http://www.denverpost.com/cda/article/print/0,1674,36%257E33%257E801767,00.html
Hey Steve! I have the 1st retrace at 8831. This may take a while, at least several days. In fact, I hope it takes us right into warnings cause I'm heavy on the short side. Took some patience. Do you look for any bounces at retrace levels or will you just ride the slide?
My Explanation on my Negative Semi-Opinion
I have been asked by several readers to expound on why I am so negative on the Semi-conductor group, as my views seem to be 180 degrees from anal-heads and the talking-butt-heads in the media ...Yes I am still very negative on the Semi-sector as a whole, especially after this irrational recent run-up in stock prices as the valuations are now even more out of whack, and it is ridiculous on how the media feeds this hype. They still believe the promote daily that the Semi-conductor industry will lead us out of the recession...this just is not so. What they fail to do is a simple supply/demand analysis, along with a driver analysis...according to my research the P/C sector is in a trough period and will not see an uptick until Q3 of 2003, the Mobile Phone industry is troughing as well and I do not expect to see a bottoming here until Q2 of 2003. The Semi-conductor industry lacks sufficient drivers currently to sustain growth and with out such, will continue to falter. Especially the semi-equipment makers as capex expenditures are pushed out and/or canceled.
Global sales of chip making equipment fell 18.4% in June from a year earlier, a sharp slowdown from the heated pace of declines over the past year. The media recently only focused on a snap shot of information when they forecasted that the semiconductor sector has bottomed...the recent book-to-bill numbers. While I will concur that it appears that the industry may be applying the brakes on the recent free-fall, and is starting to trough, it has not done a reversal from last year's record-breaking slump. Sales of equipment to make and test microchips rose to $1.85 billion in June, the highest since September, however this is a seasonal blip spurred by over an historic over estimation on the demand front with regard toward restocking ahead of Q4 needs.
However, forward-looking data, has recently cast doubts on the recovery's prospects. remember folks it is not as important to see where you have been, when evaluating a sector...but where you are headed. The latest figures from the North American industry showed a 2% fall in July chip equipment orders, a leading indicator of future sales. The data for June continued to show relative strength in Asia's emerging semiconductor centers, with Taiwan posting 49.3% growth to $463.1 million while South Korean sales fell 29.0% to $101.1 million. Sales in North America fell 33.0% to $473.6 million, while Japan also posted a drop of 37.9% $350.3 million and Europe fell 40.6% to $184.5 million. Quarterly figures showed a 34.0% drop in equipment sales in the April-June period from a year earlier to $4.66 billion. Taiwan was the only region showing growth in the quarter, with a 10.7% rise to $1.05 billion. Japan posted the largest drop of 55.7% to $786.3 million.
Thomas Weisel issued a research report about inventory levels in the electronics supply chain this week. They conclude that semiconductor manufacturers hold the most inventory at 64% of the total which compares with 33% in the second quarter of 2001. They are looking at a modest recovery in spending by non-PC chip segments. But are less optimistic that the PC chip business will participate to the same extent." He also expects DRAM manufacturers to invest at low levels. A picture is worth 10,000 words, I have an extensive data base of B-2-B data.... T-Waves Book to Bill Chart http://www.twaves.com/T-waves%20Book%20to%20Bill%20Chart.htm
Ironically: Salomon Smith Barney today comes out and reduces their semi industry growth forecast for 2002 to +0.5% from +4% and for 2003 to 12% from 21%, and projects 17% for 2004; semi shipments in 1H02 had been running slightly above trend, but firm believes this was due to excess inventory builds being worked off; with the exception of wireless handsets, demand in most segments remains slow and a seasonal uptick in 2H02 may be weaker than normal. Top picks are ADI, TXN, MU, and INTC. Maybe they are reading T-Waves !!
Best of Luck
Steve
>>recent move in PFCB
Just an opinion, but...
Not a 52 week high, was higher back in May, volume not exceptional, appears to be just following the general market movement at this time.
I would say no, but could certainly be wrong.
Good luck in your trading...
-mike
question for anyone skilled with TA.
Does the recent move in PFCB qualify as a "breakout" in technical terms?
thanks
Steve,
Congrats on your SLM short. You did great...
-mike
simmon..
Basically due to the end of aug. being historically bad..
The big run in the past weeks need some relief..
Market way overbought...
TC2
topcard,
why doesnt next week look good? can you plz expand on this.
Thanks
randal
Here are some thoughts on the Semi equipment B-2-B last night... here is a T-Waves chart depicting, the overall trends for the past 5+ years…I have an extensive Data base on the B-2-B Sometime a picture is very valuable
http://www.twaves.com/T-waves%20Book%20to%20Bill%20Chart.htm
Capital spending cuts by chip makers (INTC, TSM, USM, TXN, AMD) all took their toll last month on the makers of the equipment used to build and test chips, according to data released yesterday by the SEMI. North American makers of semiconductor equipment recorded $1.15 billion in new orders in July, a decline of 2%. Equipment billings, a measure of the value of equipment accepted by customers and booked as revenue, rose 7% in July to $995 million from $927 million in June. "The July bookings data likely reflects renewed questions about the robustness of the economic recovery and the prospects for the consumption of electronic goods," said Dan Tracy, director of industry research and statistics for SEMI. The monthly data shows a ratio of orders to billings known in the industry as the book-to-bill ratio of 1.16. A ratio higher than 1 means that orders for new equipment outpaced deliveries of equipment orders in previous months.
Lehman remains cautious on semi equipment Following last night's semi book-to-bill report for July Lehman remains cautious on the prospects for semi equipment shares due to the belief that end market dynamics remain weak, consensus expectations for CY03 are too high, and valuations could come under further pressure near-term.
Chip equipment maker Kulicke & Soffa (KLIC) warned yesterday morning during a mid-quarter update. The company makes tools to build and test microchips and said the last quarter has been a roller coaster ride. They said companies were deferring orders and recent capital expenditure cutbacks were hampering sales. They also said customers were unwilling to pay for higher performance products and were content to keep their current equipment until demand returns. They are now forecasting a steeper downturn than expected.
After the bell Newport Corporation a global supplier of high-precision test, measurement and automation systems and subsystems that enable manufacturers of fiber optic components, semiconductor capital equipment, high-precision products to automate manufacturing processes, enhance product performance, and improve manufacturing efficiencies and yields. WARNED...The company, citing the downturn in the fiber optics communications market and the current uncertainty in the semiconductor equipment area. They announced a cost reduction program and a reorganization of its business units geared toward achieving profitability during "this period of weak demand"; they expect these actions to result in annualized savings of $12.0-$14.0 million. "As a result of the potentially lower sales to semi customers and the removal of sales from our Minnesota facility, we believe that our Q3 sales may fall slightly below the $48.0 million we forecasted as the low end of the range in guidance provided in July 2002. We are, however, confident that we will show increased sales sequentially compared with the $44.0 million of sales recorded in Q2". They now expect to report a loss for Q3 as opposed to the prior expectation of $0.00-$0.02.
The chip equipment industry has been hit hard by a fresh wave of cuts in capital spending by chipmakers, and weakness in demand for chip-hungry hardware like personal computers. On Monday Banc Of America Securities reduced its semiconductor capital spending estimate for 2003, mainly because personal-computer chip makers are unlikely to increase spending next year and because memory chip makers will likely continue to invest in equipment at very low levels. Analyst Mark FitzGerald said Intel Corp. (INTC) one of the largest purchasers of chip equipment will scale back its capital-spending budget in 2003 to $4 billion from the $5 billion to $5.3 billion range in 2002. The analyst is now calling for total spending in 2003 to increase 7.1% year over year to $28.8 billion, which is lower than his previous estimate for 10% to 20% growth. "If we are correct," wrote the analyst, "then the recovery will be the most protracted and modest recovery in the industry's history."
Thomas Weisel analysts issued a research report about inventory levels in the electronics supply chain this week. The analysts conclude that semiconductor manufacturers hold the most inventory at 64% of the total which compares with 33% in the second quarter of 2001. Analyst Mark FitzGerald cut his estimates on Novellus and Lam Research. He also culled his industry projection for 2003 capital expenditures. "We are looking at a modest recovery in spending by non-PC chip segments. But we are less optimistic that the PC chip business will participate to the same extent." He also expects DRAM manufacturers to invest at low levels. A picture is worth 10,000 words, I have an extensive data base of B-2-B data.... T-Waves Book to Bill Chart Forbes did a great article called "A Double-Dip In Chips?" http://www.forbes.com/2002/08/20/0820chips.html?partner=yahoo&referrer= It was supposed to be in full recovery mode by now, but the bounce-back of the global semiconductor industry seems to be stalled for the foreseeable future . In fact, industry insiders are now expressing fears that a double-dip scenario may be in the works. Following last year's 33% drop in chip sales, this year is on course to show modest growth. But, as with the wider economy, some analysts are starting to talk about the possibility of a weaker 2003.
Best of Luck
Steve
TC2 your assessment is possibly right on target
Today looks like a classic gap up & snap down...Next week doesn`t look good at all...TC2
T-Wavers...looks like after a bit of a drop here, we should pull up into the green...any comments??????
Drat! That should have read 'very over-bought market'.
-mike
Bought a little gold this afternoon at the low, and it closed up from there. Anticipating a pull back on the very oversold market, and some continuing and escalating tension with the Iraq war fears. No long term hold plans, just a trade.
Good luck to us all...
-mike
Steve,
Are you going short at this point?
Randal
T-Wave/Tetres/Steve.......I totally agree, your web site service and insight are well worth the fee..
34Simmons
Thanks Mr. USA. Bought Q Puts today. Hoping that tomorrow's action for NDX and Sox will be significant, significantly lower that is. Good luck to you.
BeProfitable - depends on which chart you look at NDX and SOX both hit HOD near turn window, SPX/DOW did not. Tomorrow will tell whether todays high on the NDX and SOX are significant.
USA/Steve...Help me understand this comment regarding the accuracy of the turn time. TIA
Tetres, nice call on turn window for today, and your put option entry levels, all lined up nicely for a market top.
OT: Tetres, I see you're posting on Raging Bull by the handle "twaves". Why bother?
Believe it or not I was an infrequent poster/semi-frequent lurker on Raging Bull until I was Tos'd for posting a links to http://www.fuckedcompany.com which, despite the web name, is actually a decent site. Raging Bull called this "vulgar" and "profanity", which is a stretch, imo.
I assume Raging Bull took exception to your posts because some included a link to your T-waves site, which is ridiculous, imo. My point is, given the quality of the information contained in your posts, you were an asset to Raging Bull. Believe me, Raging Bull needs posters of your caliber far more than you need RB.
I think a good riddance is in order with the Bull. Your departure would be their loss. But this is of course JMVHO.
Thanks, as always, for sharing you thoughts and market expertise.
I suggest my bullish friends read these thought, some may call them ramblings.
I am very disturbed by the continued out-flows of mutual funds...one of the keys that I use to gauge investor and consumer confidence is the money flows into/out of mutual funds and equities. U.S. tax-free money market funds saw $1.3 billion of outflows in the latest week, lowering total assets to $272.7 billion. TrimTabs.com reported that investors withdrew $3.5 billion from stock funds in the prior week, the week of the initial bounce from the recent reactionary lows, and those withdrawals accelerated this week to an additional $5.4 billion. AMG backs this up as they claim Stock Funds saw $4.6 Billion Outflow In Week Ended August 14th Investors withdrew a net $4.6 billion from equity funds in the week ended Wednesday, according to AMG Data Services. More than 65% of the net outflows came from domestic equity funds, which is down from record-high levels seen a few weeks ago. Real Estate, a sector of calm throughout the recent market turbulence, and healthcare/biotech funds reported inflows for the third consecutive week. Investors continue to flee the tech sector as technology funds reported the largest outflows since late May. Wall Street players are also bailing out of the rocky Japanese markets. Japan equity funds reported the largest outflows seen since late May of last year. Investors seem to be taking comfort in the bond sector, with taxable bond inflows totaling $1.2 billion. Government funds investing in mortgage-backed securities and investment grade corporate bonds are receiving a large influx of the incoming monies.
I have a couple of questions the BULLS should really sit back and ponder...If consumers were feeling that the bottom was definitely in then why were they taking even more money out of their funds this week? In retrospect if they are using this money to fund their current purchases then the so-called unstoppable consumer may just be about tapped out. When we reflect upon the recent surge in bankruptcies, we find a startling statistic. Americans have been filing for bankruptcy in record numbers during the difficult economic times of the past year, according to statistics released by the federal courts Wednesday. Courts around the United States recorded more than 1.5 million bankruptcy filings during the 12-month period ending June 30, the largest number ever recorded, according to the Administrative Office of the U.S. Courts.
Also, once the consumer is done spending for those deeply discounted big ticket items such as cars, trucks, home refurbishing, pools etc.... what's left is being spent on consumable items like clothes, food, housing, education, toys, etc. Once spent this money is GONE Forever!!
It is not and will not be available in the future for investing in the so-called great investment vehicle of the century the Stock Market…again. That money is lost to the market and while it is adding fuel to the current economic situation the resource is very limited, and is drying up, this will not bode well for the markets in the short term is also a limited resource. Just my humble opinion for what it is worth...an opinion that you will not find on CNBC, CNN, of the other hyping media groups tied into the Wall Street malaise.
Best of Luck
Steve
What may loom ahead in my opinion is a 85% chance we enter a double-dip recession
Trillions in stock-market losses and sagging consumer confidence threaten to repeat a pattern last seen in 1981. Wall Street's relentless slide, coupled with a loss of confidence by big business, is now threatening to create a rare phenomenon in United States history called the double-dip recession. While the economy is still at a very modest pace at the moment, a case can easily be made that the loss of trillions of dollars in stock value and a series of corporate scandals is creating such pessimism that it alone could push the US back into recession by the end of the year.
What concerns me is that that further monetary easing by Sir Alan and his band of merry men would most likely delay a necessary, yet painful, purging of excesses from the bubble years. Personal saving is still far too low, and corporate and household debt is at extreme levels. Excess capacity still needs to be culled from the corporate root cellars. Recessions are a natural course of economic cycles, that the drive this corrective effect. Yet even after the recent pro forma downward revisions to GDP, last year's recession was still one of the mildest on record too mild to do much about the excesses that are facing corporate America.
Here lies the dilemma. Lower interest rates may now be vital to lessen the deflationary risks, (even possible stagflation) including the risk that deflation would further increase the debt burden of households and companies. Yet easy money has encouraged people to borrow more and has thus delayed the inevitable adjustment in their households' balance sheets. The role of monetary policy is to ease such adjustments, not to postpone them. As a result, an overhang of debt could act as a drag on growth for several years to come.
The Federal Reserve is not yet convinced that America's economy is heading for a double-dip recession. At its recent policy meeting on August 13th, the central bank decided to keep its federal-funds rate unchanged, at a 40-year low of 1.75%. Still, it signaled a readiness to cut rates should the economy look like it was going to weaken significantly further. GDP growth in the second quarter slowed to only 1.1% at an annual rate. In July, the purchasing managers' indices of activity in both manufacturing and services fell sharply; total hours worked also declined. Retail sales rose by a robust 1.2% in July, yet this was due mainly to car firms offering interest-free loans. Not counting cars and petrol, retail sales were flat. And as we saw consumer confidence fell sharply. The slide in confidence partly reflects the slump in equities. Share prices have picked up a little from their late-July lows, yet the stock market is still worth about $7.8 trillion less than at its peak in early 2000. The loss has partly been offset by a rise in house prices, but the latest figures suggest that the housing market may now be cooling off, as we have seen two months of contractions. For the third year in a row, households are likely to see their net wealth shrink. Savings rates are still historically low, so unless share prices rebound, households will probably have to start saving more and spending less, something the American public is not generally accustomed too.
Another cause for concern is tighter conditions for corporate credit. Not only have banks tightened their lending standards; borrowing in the corporate-bond market has also got much tougher. Interest-rate spreads (the difference between the yield on corporate and Treasury bonds) have widened significantly and as a result, many firms face a higher cost of capital, despite the fall in the yields on government bonds. A crunch caused by firms finding it hard to refinance their debts would most likely result in another round of cost cutting.
These are all reasons to expect that Sir Greenspan and his band of merry followers will most likely reduce interest rates again, possibly at their next meeting on September 24th. Perhaps the strongest reason, though, is that if the economy does slip back into recession, it will be at a point of very low inflation. America's GDP deflator rose by just 1% in the year to the second quarter. Another slump in output would nudge the economy dangerously close to deflation.
Now the FED is also hoping that Plunging Interest Rates will impact and potentially save the economy!! By signaling that it was worried about the economy but felt interest rates were sufficiently low to keep the recovery on track, the Fed unleashed a rally in the U.S. Treasuries market that has sent benchmark yields plunging below 4.00% at one point levels not seen since 1963. Consumers, businesses and state governments are all benefiting from the super-low yields that have sparked a big wave of home refinancings and slashed baseline borrowing costs freeing up cash for a struggling economy in need of a shot of adrenaline.
Sir Greenspan and his band of merry band of followers are delighted to see this course. The 1.4% point drop in 10-year Treasury yields during the past five months has an even larger impact on consumers through lower mortgage rates than a cut in the official federal funds rate ever could. Currently nearly 72% of the $8.8 trillion in debt households have is in the form of mortgages.
With the historically low market rates dragging down mortgage rates to levels not seen in decades, Americans have lined up in record numbers to take out mortgages for home purchases or refinance. Now if the American populace was prudent this allows expensive credit card debt to be paid off, fattens checkbooks and, as a result, helps boost consumer spending. With home values rising roughly 15-17% in the past year, homeowners have been able to tap into a growing source of wealth.
Among the forces that have helped to drive the 10-year Treasury note's yield down to historic lows below 4% was the long-awaited arrival of a huge wave of hedging activity from mortgage market participants. Heavy buying from mortgage investors seeking to hedge against negative convexity risks in their portfolio was seen in both Treasury and agency markets. The buying took place a day after the Federal Reserve decided to keep short- term target rate at 1.75% while acknowledging that the downside risks to the economy are outweighing its potential upside. That stance was interpreted by some as a signal to unwind so-called "curve steepening" trades in the Treasurys market, moving out of short-dated Treasuries into longer-dated maturities thus driving their yields lower. The benchmark 10-year Treasury notes has seen a 39-year low, as it moved to a new low of 3.96% last week.
Thirty-year mortgage rates are expected to slide to a new record low this week after falling to 6.13% last week, opening up the opportunity to refinance for millions of Americans with old mortgages at rates as high as 7.5% who haven't done so yet. Last year a record 7 million homeowners refinanced their mortgages, cashing in on about $110 billion of equity wealth in the process. With the sharp drop in rates likely to mean even more refinancings this year. The powerful support from consumers cashing in on their rising home equity values and taking advantage of falling mortgage rates to buy homes is a new twist compared with prior periods of recession and recovery. This is what the Fed is banking on to power the continued consumer spending.
Companies will also reap the rewards of historically low market yields by borrowing more cheaply. And after roughly two months when the stock market's sharp slide nearly shut down capital markets and jacked up borrowing costs, new debt issues are beginning to emerge. Even if credit spreads widen somewhat, the fact that it's off a lower number still gives corporations some absolute rate relief. State and local governments have also seized on the drop in yields to issue billions in long-term debt that has saved them money by replacing expensive, older debt and going into deficit borrowing at low rates. The state and local borrowing has also come to fund new projects such as bridges and courthouses, maintaining spending that helps the economy even as budgets are pinched by falling revenue. Long-term municipal debt issuance is up 17% so far this year to $200 billion and is expected to reach a record that surpasses the $292 billion sold in 1993.
Sir Greenspan may be backed into a corner. Just some food for thought
Best of Luck
Steve
http://twaves.com
New York Stock Exchange to delay opening Sept. 11
NEW YORK (APOnline) — In deference to the first anniversary of the Sept. 11 terrorist attacks, the New York Stock Exchange said it will delay the opening of trading.
In a statement released Friday, NYSE chairman and chief executive Dick Grasso said the decision was made out of respect for the memorial services being planned Sept. 11 in New York City.
The exchange, which begins trading at 9:30 a.m. ET, will start at 11 a.m.
http://www.usatoday.com/money/markets/us/2002-08-16-nyse_x.htm
Hi Steve and all,
I'm watching BSC for a short, hoping I haven't already missed it...
-mike
Hey Steve! see you tried to get cute (greedy) on BRCD today. Your Midday and BA calls made up for it very nicely, thank you very much. What would you say to some OEX-450-puts for the slide into the weekend ($10-$1 spread today). Those 03 LEAPS are cheap again. Might be worth nibbling on, on down days here on out. I really think 8950-9000 will just about do it between now and, let's say Sept. 3rd. window dressing. Then come warnings again.
Thanks again for a good day and week so far. What ever happen to that crash/capitulation plan you eluded to some time back? Did I miss it?
Hello Folks
So far today I have bought ISIL @ $15.78 1,200
I bought 1,500 of RETK @ $5.55 this morning
Best of Luck
Steve
CEO signings...700 left of the required...is their some sort of lunar or cosmic event that will try to move markets today to the upside???
From forcasts & newsletters big up & down waves are predicted for the next few days...I cannot see any motivation to go long..
Any thoughts from the Gurus here...TIA...TC2
Any thoughts here on the near term market?? I know some that are looking long, but many more on the short side..TC2
Very Astute point Arieg
Sarai! the lack of inflation you see is on the verge of graduating to Deflation. Where inflation is a slow bleed on equities, deflation is the big ugly. Rising equities(at least last week),in a deflationary environment, is the rubber band getting wound tight now. The tighter we get the bigger the snap. Bears are getting downright giddy over this thought. If we get there, no telling when, it won't be pretty.
Tetres, I posted this on another thread. The lack of inflation amazes me.
Posted by: sarai
In reply to: Lane Hall-Witt who wrote msg# 13055 Date:8/8/2002 10:30:45 PM
Post #of 13399
Rally this Mr Greenspan and another rate cut. Can't you hear the pundits sqawk(ing), "Deflation is good for stocks because it means more rate cuts!" Yeehaa!...Because that pundit glass is always "half full"....:o)
Seriously, I don't understand declining prices given Greenspan's inflationary policies.... This is Greenspan's financial engineering for 'The New Economy'? Otherwise known as Greenspan-omics?....
All kidding aside folks, IMO, we've got some serious imbalances here....And this is what the government ADMITS TO.
Note consumer spending and retail sales.
Wholesale Inflation Tame, Job View Better
August 08, 2002 04:45 PM ET Email this article Printer friendly version
By Joanne Morrison
WASHINGTON (Reuters) - U.S. wholesale prices fell unexpectedly in July, leaving little worry of inflation and giving the Federal Reserve ample time to keep interest rates at 40-year lows while the economy staggers to recovery.
In addition, the labor market is showing signs of slow improvement in the face of growing economic uncertainty. But sales at some key discount stores -- the kingpin of consumer spending during the slowdown -- came in lower than expected, latest data on Thursday showed.
The Labor Department's Producer Price Index, a closely watched gauge of inflation at the wholesale level, declined by 0.2 percent, defying Wall Street economists' expectations of a slight 0.1 percent gain.
The department said excluding declines in prices for both cars and light trucks that were brought on by zero percent financing deals and other producer incentives, the overall wholesale inflation index would have been unchanged.
Economists agreed the PPI report confirms that inflation is indeed not a threat. And most of Wall Street believes the Fed is not likely to cut interest rates any time soon, even with a weakening economic picture.
Policymakers will meet Tuesday to set interest rates.
"The latest PPI figures strengthen the case for holding interest rates steady but do not even come close to making a case for cutting them," said Mark Vitner, senior economist at Wachovia Securities in Charlotte, N.C.
The core PPI rate, which excludes volatile food and energy prices, fell by 0.3 percent. It was the biggest drop in nine months and also was unexpected.
On the labor front, a government report showed that fewer Americans last week signed up for jobless benefits. The four-week moving average of these claims, a less volatile figure, dropped to its lowest level in more than a year.
"The weekly claims data continue to point to gradual labor market improvement, however payroll growth remains very sluggish," said Susan Polatz, economist at Banc of America Securities in New York.
In a sign companies are slow to take on new hires, the number of workers remaining on jobless benefits remained at levels seen after the Sept. 11 attacks when the economy began hemorrhaging jobs, according to the Labor Department report.
RETAILERS SEE ONLY MODEST GAINS
Consumer spending has slowed, according to same-store sales reports out on Thursday. The nation's key retailers reported only modest gains, at best, in July as consumers pulled back on spending in the face of the prolonged stock market slump.
Among those stores, the world's No. 1 retailer, WalMart Stores Inc., said its July sales came in lower than expected.
For most retailers, tighter control over inventories led to fewer clearance sales and better profit margins in July. But that also made for less overall merchandise sold.
Higher priced department stores reported declines, as consumers leery about the economy opted for discounters.
"July sales are soft and we relate this to the fact that there is very little hiring going on," said Kurt Barnard, publisher of Barnard's Retail Trend Report. "People will buy what they need, not what they want."
Stocks ended their third session in a row on positive ground. The Dow Jones Industrial Average ended up 255 points, or 3 percent, while the tech-laden Nasdaq Composite Index added closed up 35 points, or 2.8 percent.
U.S. treasury bonds were down as investors turned to improving stock markets.
FED MEETS NEXT WEEK
Amid growing signs of economic weakness, the benign reading on wholesale inflation during July will no doubt give the Fed room to hold its benchmark overnight interest rate at a 40-year low of 1.75 percent for a prolonged period.
Fed officials will meet to consider interest-rate policy on Tuesday amid widespread expectations they will not make any interest-rate move.
But a spate of weak economic data has driven a handful of Wall Street firms who trade directly with the Fed to predict the central bank may opt to reduce rates even more this year. Among 21 of these primary dealers, four expect more cuts by year-end, according to a recent Reuters poll.
That sentiment has helped drive down the average 30-year fixed-rate mortgage this week to new lows not seen in decades, according to mortgage finance giant Freddie Mac.
"That expectation, in turn, has created a boon for potential and existing homeowners in the form of lower mortgage rates," said Frank Nothaft, Freddie Mac's chief economist.
Last year as the economy sank into recession, the Fed cut interest rates 11 times. But so far this year, it has kept rates unchanged.
(With additional reporting from Angela Moore)
T, I thought you might be interested, when you have some reading time. Roubini is excellent! Best regards. :)
Deflation:
CAN DEFLATION BE PREVENTED
http://web.mit.edu/krugman/www/deflator.html
From Nouriel Roubini:
http://pages.stern.nyu.edu/~nroubini/Deflation.html
My CSCO Thoughts
However the talking heads will talk up the pro forma EPS numbers, and the idiot anal-heads that have been stumped again (those predicting that CSCO would miss and guide lower)...will of course jump right in. The Cisco news and related spin will be critical to the open on today. I think it will be seen a a great hurdle and a positive in a market that was expecting the worst. It is too early to predict the end result but the lack of a smoking accounting scandal gun or a dumping of balance sheet items should be positive for a market that was expecting just that. All to often investors do not read balance sheet nor listen to conference calls...the rely on the CNBC Diva Maria and her bumbling fools for the news, or the read headlines only.
Cisco Systems EPS estimates are raised by several anal-heads today: Cautious revenue guidance for the Oct quarter is leading most analysts to trim revenue estimates for Cisco this morning, but better than expected gross margins are leading most firms to up their EPS estimates for Cisco's October quarter and new fiscal year; prior consensus estimates of $0.12 and $0.52 appear likely to go to about $0.13-0.14 and $0.58-0.59.
Now as Paul Harvey is fond of saying...for the rest of the story.
CSCO posted Net sales for the Q4 of fiscal 2002 were $4.8 billion, compared to $4.3 billion for the fourth quarter of fiscal 2001, an increase of 12%, and compared to $4.8 billion for the third quarter of fiscal 2002. (So net sales were flat quarter/quarter) CSCO attributed much of their gains to cost cutting not sales increases. this is the key folks. They said major customers remained cautious but steady...however the telecommunications market remained "challenged". They admitted being hit by a slowdown in their enterprise customer base but said the serious problems in telecommunications only impacted 20% of their income.
John Chambers said in an interview that he was more cautious about the future outlook than he had been in the past. Visibility was tightening and sales in other countries were slipping. He said it was a strong quarter for Cisco and they had done everything possible for this quarter but could not control the economy. (hinting of potential problems ahead) He said book-to-bill numbers for next quarter could fall below 1.0, and another hint that things are getting worse...this means fewer new orders than orders shipped folks.
Net income for the fourth quarter of fiscal 2002 on a generally accepted accounting principle (GAAP) basis, was $772 million or $0.10 per share, compared with net income of $7 million or $0.00 per share for the fourth quarter of fiscal 2001, and $729 million or $0.10 per share for the third quarter of fiscal 2002. (So EPS was flat quarter/quarter)
CSCO’s net sales were down $3.378 Billion or 15.15% year over year, is this something to brag about I do not think so, help me out here please. According to CSCO GAAP net income for fiscal 2002 was $1.9 billion or $0.25 per share with a current price of $13.00 that equates to a P/E of 52 astonishing for a no growth company. And this doesn’t account for the stock options that CSCO refuses to itemize, according to my calculations CSCO’s stock options would drop the GAAP EPS down to $0.08 hence CSCO would have a P/E of 162.50
Cisco also today announced that its board of directors has increased the company's stock repurchase program to a total of up to $8 billion through September 12, 2003. This represents an increase of $5 billion from the original $3 billion authorized in September 2001. Of the $8 billion total, approximately $2 billion has been repurchased to date. (Now CSCO only has Cash and cash equivalents $9.484 Billion and they expect us to believe they are going to use 64% of their reserves to buy back stock?)
Tetres - saw your SOX targets, I did notice the 8yr SOX log chart trendline looked like it was pierced slightly yesterday, if that fails then I would have to favor the linear trendlines, mine agree with yours, and make sense with the fibo confluence areas I'm seeing far below on the NDX. I think you are right about things getting worse ahead of the 8/14 sign in blood date.
Tetres - I tried to adjust my order to 21.35 near close but missed the 4pm close by a few seconds, had a clock sync error (I don't trade after hours on Q's, cause Datek doesn't allow it, which continues to amaze me). If I had picked up those shares I'd be selling the opening this morning!
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