Replies to post #43620 on Value Microcaps Motherboard

[roguedolphin]

Consumer sentiment plunges to 7-month low
Current attitudes plunge 13 points, most in 28-year history of survey
By Rex Nutting, MarketWatch
Last Update: 4:32 PM ET May 12, 2006

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BE16C1EEC%2DFDFF%2D4ABB%2D96FA%2D8C975CB5DA5...


WASHINGTON (MarketWatch) -- Soaring gasoline prices shattered U.S. consumers' economic confidence in early May.
With retail gasoline prices jumping more than 50 cents in the past two months, consumers' views about the current economic situation plunged in early May at the fastest rate in at least 28 years, researchers at the University of Michigan said Friday.
The University of Michigan consumer sentiment index fell to 79.0 in May -- it's the lowest level since October's 74.2 reading -- from 87.4 in April. Economists expected a much smaller decline to about 86.4, according to a survey conducted by MarketWatch. See Economic Calendar.
"We think this drop reflects the sudden surge in gas prices," said Ian Shepherdson, chief U.S. economist for High Frequency Economics. "If sentiment stays at this level -- it might even decline further -- you should expect a serious slowing" in consumption.
The big decline came in the current-conditions index, which plunged 13 points to 96.2, the biggest one-month decline since the University of Michigan switched to a monthly survey in 1978, outpacing the previously steepest 10.7-point decline in November 1981.
The current-conditions index has fallen as many as 10 points only a few times in the past 28 years: once after Hurricane Katrina in September 2005; once in the depths of the 1991 recession; once after Saddam Hussein captured Kuwait in 1990; once during the 1981 recession; and once in early 1980, just after hostages were taken at the U.S. Embassy in Tehran.
In May, more consumers mentioned high gasoline prices when asked about recent developments than at any other time since the sentiment survey began being taken on a quarterly basis more than 50 years ago, the researchers said. And the largest proportion in 25 years said high gasoline prices were reducing their standard of living.
Impact on economy
So far, the jump in gasoline prices has had only a minor impact on economic growth and consumer spending. In April, retail sales increased 0.5%, but most of the increase was due to higher gas prices. Excluding gasoline sales, retail sales increased 0.1%.
'We think this drop reflects the sudden surge in gas prices.'
— Ian Shepherdson, High Frequency Economics
"It's true that sharp declines in sentiment do not always foreshadow immediate declines in spending," said Jay Feldman, an economist for Credit Suisse. "But we are becoming somewhat more concerned about energy prices reaching a level which causes consumers to lose tolerance and pull back more than they have in recent years."
"We do look for some temporary cooling in May or June," said Stephen Stanley, chief economist for RBS Greenwich Capital.
"We believe that a gradually softening trend for consumer spending is the most likely scenario in the quarters ahead, particularly as housing cools off," said Josh Shapiro, chief economist for MFR. "However, we do not think that consumer-spending growth is going to fall off of a cliff, as there ought to be plenty of support derived by gains in wages and salaries owing to job growth."
Every penny increase in the price per gallon of gas adds about $1 billion to consumer spending, said Joseph LaVorgna, an economist for Deutsche Bank. Consumers could handle the extra $100 billion when prices doubled from $1 to $2 per gallon between 2002 and 2005 because interest rates were so low, he said. But now rates are up.
"Hence, the rise in energy prices may finally act as a dampener on spending," LaVorgna said.
Even if they keep spending, consumers could take their anger out at the politicians in November. Confidence in the government's economic policies fell to lowest levels in more than 10 years. Both political parties have struggled to propose workable and popular solutions to the rise in gas prices. See earlier story.
Inflation expectations
Consumer sentiment has fallen in four of the past five months after peaking at 91.5 in December. When gas prices fall, the index rises, but when gas prices soar, confidence suffers.
Consumers are also downbeat about the near-term economic outlook. The expectations index, reflecting views about the next six months, fell to 68.0 from 73.4 -- also the lowest level since October.
Meanwhile, consumers' expectations for inflation in the next year jumped from 3.3% to 3.9%. But expectations over the next five years were unchanged at 3.1%.
In other reports released Friday, the Commerce Department said the U.S. trade deficit narrowed to $62 billion in March on record exports. See full story.
The Labor Department said import prices jumped 2.1% in April, with all the gains coming from higher petroleum costs. See full story.
Rex Nutting is Washington bureau chief of MarketWatch.

[roguedolphin]

"food for thought" from SI's most people-marked rabble rouser....

http://www.siliconinvestor.com/readmsg.aspx?msgid=22449167

From: SliderOnTheBlack 5/14/2006 12:21:46 PM
Read Replies (1) of 1571

******* Buffettology & the 4 "B's" *******




Tech & Internet Bubble -- Deja Vu All Over Again?

Buffett was right about the Tech & Internet Bubble... he now says commodities are in a speculative bubble... will he be right again?




The Rule of the 4 "B's"....as demonstrated by Mr. "B"


1. Be ridin' the right bull.

2. Be early

3. Be loaded, or levered.

4. Never, ever, EVER ...be caught hanging around at last call.




FWIW:


-- Buffett has now closed out his massive US Dollar Currency Short.(...he caught a near 40% collapse in the USD)

-- Buffett has now sold his Silver hoarde. (129.7 million ounces of silver ounces— a fifth of the world’s mine supply — bought at $6 an ounce in 1998...do you think he's going to lose any sleep about potentially missing THE top?)


Warren Buffett has just given you a lesson -- whether you choose to learn, or listen...is all up to you:



Buffett did not get greedy. He was EARLY, he got LOADED & LEVERED on the RIGHT BULL (long Silver & short the USD) and he did NOT get caught hanging around at -- "Last Call".



The greatest mistake today's traders make -- is in not studying and learning the timeless lessons from the masters...who's timeless principles on markets and human nature work in today's market and will work tommorrow's markets:


Some things never change... all speculations end the same way -- always have & always will.


"Making money in commodity cyclicals has never been the problem....keeping it has been the problem"


"The Big, Fast & EASY Money is made by nailing the bottoms -- not the tops"


"Smart Money finds & levers bottoms...Fools chase Tops"


Food for thought...

SOTB

[roguedolphin]

Why China's money matters to you
By David R. Francis
May 15, 2006


United States Treasury Secretary John Snow held a major news conference at 4:30 p.m. last Wednesday, available live on the Web. It was probably watched in financial circles around the world. At 4:45 p.m., Sens. Charles Schumer (D) of New York and Lindsey Graham (R) of South Carolina commented on Capitol Hill.

That's the way big news gets out in Washington nowadays. The news: China was again not declared to be "manipulating" the value of its currency, the yuan.

It may sound obscure. But it isn't. Because China has become such a key player in the world economy, its foreign-exchange policy affects anyone who goes shopping in this country - and many more consumers around the world.

The news was kept super secret. An advance leak might have given speculators in the massive foreign-exchange market a lucrative advantage.

At stake, should the repercussions of China's policy be negative, is the possibility of a global recession, warns Ben Carliner, research director of the Economic Strategy Institute, a think tank in Washington, D.C.

He fears that the Bush administration's failure to name China as a currency manipulator under the 1988 Trade Act will prompt rising protectionism in the United States.

Up to now, the US has been engaged in a "good cop, bad cop" routine with China, Mr. Carliner suspects. Wanting to avert a trade war, the administration has been urging the Chinese to revalue its currency for at least three years. Secretary Snow did say he was "extremely dissatisfied" with the progress China has made in this direction. Had Snow pulled the trigger on the "manipulation" gun, it could have opened the door for a review by the International Monetary Fund and congressional action.

Last July, China let the yuan rise in value a tiny amount, from 8.28 per US dollar to 8.11. It's at about 8 per dollar now. China's exchange rate is fixed by the central Peoples Bank of China against a basket of currencies.

But some economists figure a 15 to 40 percent upgrading of the yuan is necessary to correct the massive trade imbalance between the US and China.

China's currency-market intervention creates, in effect, a 33 percent subsidy for Chinese exports, calculates Peter Morici, a former chief economist of the US International Trade Commission who is now at the University of Maryland. "If that is not an unfair competitive advantage in trade, one must wonder what would qualify as such in the minds of US Treasury officials," he states.

Senators Schumer and Graham have proposed a bill that would require the administration to enter into negotiations with China for revaluation. If nothing ensues by the end of two years, the US would impose a 27.5 percent tariff on all Chinese imports. Last year, a procedural vote dealing with this bill got 63 yeas - enough to override a Bush veto.

"Our legislation may be the only way to get China to play fair in the global marketplace," Schumer stated.

Even if China decided to voluntarily revalue its currency by 20 percent, that would lead to other problems. It could push up the price of Chinese goods at Wal-Mart by a proportionate amount. Other Far East nations, such as Taiwan, Singapore, Thailand, and South Korea might let their currencies rise to get better prices for their exports.

Some economists worry that a stronger yuan would revive inflation in the US, prompting the Federal Reserve to raise short-term interest rates above the 5 percent level reached last week. And long-term mortgage rates would follow, sending the housing market downward.

On the positive side, more expensive Chinese goods could stimulate "a renaissance" in US manufacturing, notes Mr. Morici. An upturn in manufacturing would provide more well-paying jobs for Americans, boosting US living standards.

Mr. Carliner dubs the Chinese control of its currency value "protectionism."

Over the past 15 years, the US has bought $1.1 trillion more in Chinese merchandise than it has sold of American goods to China.

The result is that China, by the end of this year, will have socked away $1 trillion in US Treasury securities in its international reserves as a byproduct of keeping down the value of the yuan. Last year alone, the US had a record trade deficit with China of $202 billion.

Some $47 billion of that deficit, notes Washington economic consultant Charles McMillion, was in "advanced technology products." In other words, China isn't just making sweatshirts, toys, and electronic products for sale to the US.

Many economists worry that China and other Asian nations with huge hoards of US securities could decide to dump them. That could knock the dollar for a loop, raise US interest rates, pop the housing bubble, and cause a recession. Many nations in Europe and elsewhere have been relying considerably on sales to the US for their own prosperity.

To proponents of yuan revaluation, this change would be good for China. It would, Morici says, encourage rural and domestic development where it is sorely needed and dampen the excessive boom in cities where most exports are made.

In its new five-year plan, China has stated its intent to encourage just that.

http://www.csmonitor.com/2006/0515/p16s02-cogn.html

[roguedolphin]

Global stock markets tumble as U.S. dollar shatters
Big News Network.com
Saturday 13th May, 2006

***Rogue comment....maybe my use of the term "controlled devaluation" for the US dollar wasn't quite correct?? This article says the US dollar is in "freefall".****

http://feeds.bignewsnetwork.com/?sid=9b6a1c22154c3bcf

Equity markets around the world plummeted Friday as the U.S. dollar went into freefall.

The American currency's near collapse followed several weeks of declines, which has seen the dollar lose 7% of its value against the euro, yen, and the pound, in the last month alone. The dollar index (weighted against a number of currencies) has fallen to its lowest level since October 1997. The relentless selling has failed to cause even the shallowest of corrections. Friday's announcement by the Trade Department of a 5.6% fall in the trade deficit for April, coming in at $62 billion against analysts expectations of $67 billion, failed to arrest the slide.

The dollar rout has unnerved global stock markets with major falls being recorded in Asia, Europe, and the Americas. London's FTSE 100 fell 129.90 or 2.15% Friday to 5,912.10. The Paris-based CAC 40 at 5,150.45 was down 112.49 or 2.14%. The German DAX fell 138.44 or 2.29% to 5,916.28. The Amsterdam Exchanges index was off 11.79 or 2.53% at 455.09. In Sweden the OMX Stockholm 30 index fell 29.71 or 2.85% to 1,013.69. The Swiss SMI shed 143.17 or 1.77% to 7,954.10.

In Asia Japan's Nikkei 225 ended the day down 260.36 points or 1.54% at 16,601.78. The Hong Kong Hang Seng fell 238.93 or 1.39% at 16,901.85.

Middle East markets, where the week ends on Thursdays, suffered one of their worst weeks ever. Most Mideast currencies are pegged to the dollar which means the value of stock investments held by foreigners has been plummeting in line with the U.S. currency. The Dubai stock market shed 14.35% for the week, while the Abu Dhabi market gave up 10.49%. Market analysts fear the stock meltdown may feed into the property sector which is overblown, particularly in Dubai. Emaar, the emirate's largest property developer lost 22.8%, more than a fifth of its value, over the week.

In the U.S. the Dow Jones industrials fell 119.74 or 1.04% to 11,380.99 Friday, while the S&P 500 declined 14.68 or 1.27% to 1,291.24. The Nasdaq Composite shed 28.92 or 1.27% to 2,243.78.

In Canada, the Toronto S&P/TSX Composite lost 127.36 or 1.05% to 12,038.07. The Mexican Bolsa index dropped 280.37 or 1.31% to 21,154.90, while the Brazil Bovespa declined 635.10 or 1.55% to 40,211.97.

The dollar hit a new low of 1.2955 against the euro Friday, while the British pound touched 1.8998. The Swiss franc soared to 1.1965, while the Japanese yen traded as high as 109.32. The commodity currencies were litte changed from Thursday's close but in solid demand. The Canadian dollar reached 1.0991 while the Australian dollar firmed to .7782. The New Zealand dollar reached a modest high of .6325. The dollar was just shy of its lows for the day the close of trading in New York Friday.

The feverish selling this week has come despite a quarter-point increase in the Fed funds rate to 5%, well ahead of European, Swiss,and Japanese interest rates. The Fed demonstrated an increasing concern over the extent of dollar-selling by signalling its regular monthly interest rate increases may not be over. Markets have been selling the dollar on the basis the Fed will soon pause, just as other countries are planning to begin a round of interest rate increases.

The U.S., and the G7 in an April communique, expressed concern about the value of the dollar against Asian currencies, particularly the yuan, however the brunt of the selling has been borne by the euro and the Swiss franc. The Japanese yen which had lagged the majors finally caught up this week. The momentum behind the selling has not waned in recent weeks, with some traders saying the dollar-selling is over-extended, and ripe for a correction.

http://feeds.bignewsnetwork.com/?sid=9b6a1c22154c3bcf

[roguedolphin]

Gold/Silver selling off hard in overnight trading.....down 3% and -5% respectively currently.