Brusli and Forex

USD Softer, Awaits Data by Korman Tam

2007-12-03T22:30:00.000+07:00

The currency market has much to digest this week as traders look ahead to monetary policy decisions from several central banks, including the BoC, RBA, BoE and ECB. The greenback relinquished some of last week’s gains in early Monday trading, slipping against the sterling and yen. The major currency pairs will likely be dictated by a combination of sentiment over global interest rate differentials as well as any new revelations from the subprime debacle and credit crisis. Fed Chairman Bernanke’s comments last week heightened market expectations for a December rate cut. It remains unclear however, whether the anticipated ease will be a 25-bp or 50-bp cut. The economic reports over the coming week will be particularly important with the FOMC deliberating policy next Tuesday. In the session ahead, traders will look ahead to the November manufacturing ISM – forecasted to slip to 50.5 from 50.9. The main highlight this week will be Friday’s labor report, with non-farm payrolls forecasted to drop sharply in November to 75.0k, versus 166.0k from October.

Sterling Propped Higher By Manufacturing Data

The sterling bounced off its lows against the dollar to recover above the 2.06-level after an upbeat manufacturing report assuaged sentiment for a rate cut when the Bank of England announces its policy decision this week. The CIPS manufacturing PMI in November unexpectedly jumped up to 54.4, beating calls for a decline to 52.5 from the 52.8 reading in October. The data also revealed further pressure in prices, with input prices climbing to its highest level since July to 64.4 from 60.8, while output prices edged up to 57.5 versus 57 a month earlier. The new orders component improved to 55.6 from 53.8 in October, it’s highest since August.

Cable rebounded sharply after touching 2.0527 earlier in the session, buoyed by the unexpectedly strong manufacturing growth. The key highlight this week will be the Bank of England’s monetary policy announcement on Thursday morning. Although we look for the BoE to leave rates unchanged at 5.75%, given the recent commentary from MPC officials, the decision is likely to be a close one. MPC officials have highlighted the difficulty in setting policy as a result of lingering inflationary pressure and the anticipated “sharp slowdown” in UK economic growth. Further, recent inflation reports were stronger than forecast – likely to keep the BoE’s hand in check this week. Yet, depending on how grim the Board members interpret the current subprime debacle and credit crunch to be, the possibility for the Bank to alleviate the impact of tight credit conditions by easing rates remains.

GBPUSD encounters interim resistance at 2.0665, followed by 2.07 and 2.0740. Additional ceilings will emerge at 2.08, backed by 2.0830 and 2.0860. On the downside, support begins at 2.06, backed by 2.0570 and 2.0530. Subsequent floors are eyed at 2.05, followed by 2.0450 and 2.04.

401(k) Investors May See Returns Suffer by Tim Paradis

2007-12-03T22:22:00.000+07:00

Investors Ignoring the Often Free Advice of 401(k) Providers Can See Their Returns Suffer

Sales pitches bombard us every day with advice on what to eat, what to wear and what to do with our money. While savvy consumers are quick to duck many of these distractions, investors looking for advice on how to save for retirement should think twice before tossing aside the colorful brochures of their 401(k) managers.

Many 401(k) retirement plans offer investors access to online or over-the-phone chats with someone who can answer investment questions, and it appears that those who don't ask for help can end up with less money in their portfolios.

A new Charles Schwab examination of the 401(k) plans it oversees found that investors who rely on some professional advice for investment decisions enjoy greater returns than those who go it alone.

The investors who used an independent investment adviser that Schwab makes available to its 401(k) participants saw an average 14.1 percent return last year. Those who didn't solicit advice, at least from the adviser Schwab provides, saw only an 11.1 percent return. A similar gap in returns occurred in 2005.

Jim McCool, executive vice president of Schwab Corporate & Retirement Services, points out that it is well known that investors are leaving money on the table if they don't put enough into their 401(k) to merit a full matching contribution from their employer. But, he said, too few investors realize that without some professional hand-holding, they could also be giving up some money.

The services can help investors set up investments or check up on them as the years pass, he said.

"It's about helping them build a portfolio or it's about providing a retirement fund that automatically adjusts its return characteristics as the person gets older," McCool said, referring to so-called target-date funds, which gradually shift their investments into more conservative footing as a person ages and approaches retirement.

And investors who pride themselves on making sound financial decisions should note that in many cases the advice offered through their 401(k) plan doesn't carry any additional costs because the service is wrapped in a fund's overall expenses.

Jeff Tjornehoj, an analyst at fund tracker Lipper Inc., said that while many individual investors do just fine on their own, those who don't at least consider seeking advice could miss out.

"These differences -- two, three or four percentage points -- aren't going to make or break you in one year but if you compound that over decades then the differences do add up. I think it's fair to say by and large people should be asking for advice where appropriate," he said.

Even asking some simple questions can have dramatic effects on an investors' success. Investors who might think to diversify their holdings by putting 10 percent of their money into 10 funds might quickly be told this isn't necessarily the best idea.

"A lot of investors look at the 401(k) platform and they may not understand that if you are investing in a target-retirement fund that should be the only fund you put money into as far as your 401(k)," Tjornehoj said, pointing to a common mistake by investors who don't understand that such funds are designed to be one-stop-shopping investments.

Schwab's findings indicated that the differences in returns among those who seek advice and those who don't are most pronounced among younger plan participants. Often new investors don't set enough aside or invest too conservatively.

But just as important as setting the right course, analysts say, is sticking with a long-term investment strategy through short-term ups and downs.

"The two most important things are the expertise in building long-term asset allocation and also the discipline of maintaining that course," said Peng Chen, president of Ibbotson Associates, a division of Morningstar Inc. that provides financial advice for 401(k) investors.

Schwab's McCool noted that despite all the educational tools to help investors learn about investing, many don't take advantage of them and would rather be able to ask for help only when they need it.

"Ultimately, at the end of the day, investing money is an emotional decision and they need help," he said.

Copyrighted, The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press.

Wall St. eases at Monday open

2007-12-03T22:15:00.000+07:00

NEW YORK (CNNMoney.com) -- U.S. stocks were lower at Monday's open as investors considered the housing slump and awaited economic reports.

The Dow Jones industrial average straddled the breakeven point. The Nasdaq composite index eased 0.2 percent. The Standard & Poor's 500 index dropped 0.2 percent.

Among stocks in the news Monday: Activision (Charts), MetLife (Charts, Fortune 500), UnitedHealth Group (Charts, Fortune 500), Amgen (Charts, Fortune 500), Lennar (Charts, Fortune 500) and TXU (Charts, Fortune 500).

There are some readings on U.S. economic strength due Monday, particularly from the manufacturing sector. But additional weakness there could actually lift stocks if it raises hope for a bigger rate cut by the Federal Reserve at its Dec. 11 meeting.

First up is the ISM index, a survey of executives in the manufacturing sector, due at 10 a.m. ET. Economists surveyed by Briefing.com expect the reading to fall for the fifth straight month to 50.5 in November from 50.9 in October. If it slips below 50, that would indicated that the growth in the manufacturing sector has stopped and it has started to contract. The closely watched reading hasn't been below 50 since January.

Then at noon, automakers are due to start reporting their November sales. Sales tracker Edmunds.com forecasts that General Motors (Charts, Fortune 500) sales will be down 1.3 percent from a year earlier, while Ford Motor (Charts, Fortune 500) sales are forecast to be essentially unchanged. Privately-held Chrysler could see an 11 percent decline.

A modest expected gain at Toyota Motor (Charts) and forecasts of more solid gains at Honda Motor (Charts) and Nissan could trim the traditional Big Three's share of the U.S. market to 51.2 percent, according to Edmunds. If it falls below 50 percent, it would mark only the second time on record, after July of this year, that domestic brands fell behind the import brands in U.S. sales.

Stocks in the news Monday include video game publisher Activision (Charts). On Sunday, Vivendi said it plans to buy a controlling stake in the company and combine it with its game unit. The deal is expected to create a rival to Electronic Arts (Charts). Shares of Vivendi gained 2.6 percent in its home market in Paris.

Home builder Lennar (Charts, Fortune 500) said it has partnered with the real estate arm of Morgan Stanley (Charts, Fortune 50selling the new joint venture a portfolio of homes and property for $525 million. Lennar, the nation's largest home builder by revenue, has taken large charges due to the reduction of the value of its holdings and costs for getting out of land options.

Personal computer maker Dell (Charts, Fortune 500) said it would partner with advertising giant WPP Group (Charts) to create a new marketing agency that would handle $4.5 billion in Dell accounts.

In global trade, major markets in Asia finished the session lower. European stocks were mixed in morning trading.

Yen Fall as Global Stocks Surge by Yan Xu

2007-12-01T22:32:00.000+07:00

The yen fell versus high-yielding currencies as global stocks rebounded this week. Carry trades came back to the market as investors regained their risk appetite.

The greenback gained as US corporations squared positions to realize profits on financial statements by the end of the month. The euro dipped to lower 1.46 versus the dollar, and the sterling fell to below 2.06.The euro zone CPI rose at a faster-than-expected rate of 3%, increasing the case for an unchanged rate decision at ECB¡¯s next policy meeting. In the medium term, the euro is more favorable than the dollar in terms of the interest rate outlook.

US personal income rose at 0.2% in October, below the estimate and the previous reading of 0.4%. Personal spending also fell to 0.2%, lower than the expectation of 0.3%. A key inflation measure, core PCE index, remained at a monthly rate of 0.2% as expected. Chicago PMI rose from 49.7 to 52.9 in October, better than the estimate of 50.3.

The situation the Fed faces now is the inflation is contained and the economy is slowing. US futures showed traders are pricing in a 68 percent chance the Fed will cut its interest rates by a quarter-percentage point to 4.25%

Fed Chairman Ben Bernanke said yesterday on the Charlotte Chamber of Commerce meeting that resurgence in financial market in these two weeks dimmed US economic outlook. The dollar was under pressure after his comments.

The six members of the Gulf Cooperation Council may relax their fixed exchange rates to the US dollar at a meeting next Monday.

EURUSD will face interim resistance at 1.4650, followed by 1.4680 and 1.47. Additional ceilings will emerge at 1.4750, backed by 1.4780. Support starts at 1.46, backed by 1.4580, 1.4550 and 1.4520. Subsequent floors are eyed at 1.45.

GBPUSD encounters interim resistance at 2.06, backed by 2.0650 and 2.0680. Subsequent ceilings will emerge at 2.07, followed by 2.0730 and 2.0750. On the downside, support begins at 2.0550, followed by 2.0520 and 2.05. Additional floors are eyed at 2.0470, backed by 2.0450 and 2.04.

USDJPY encounters interim resistance at 111.30, backed by 111.50 and 111.80. Subsequent ceilings will emerge at 112, followed by 112.50 and 113. On the downside, support begins at 111 and 110.80, followed by 110.50. Additional floors are eyed at 110.20, backed by 110 and 109.50.

USD Buoyed Ahead of Data by Korman Tam

2007-11-29T22:26:00.000+07:00

The dollar bounced higher in overnight trading, recovering across the board following yesterday’s sell-off. The greenback edged up to 2.0628 versus the sterling and 1.4730 against the euro. In the coming session, markets will look ahead to Q3 GDP, core PCE prices, weekly jobless claims and new home sales. The economy is seen expanding by 4.8% in the third quarter, up from 3.9% previously. New home sales are expected to slip to 750k units, down from 770k units in September.

The greenback recovered from the declines prompted by the heightened anticipation that the Fed will ease rates again in December following yesterday’s dovish comments from Fed Vice Chairman Kohn. We view the dollar’s strength as a short-term corrective move and look for the downtrend to remain in place against the major currencies.Cable Retreats

Bank of England Governor King spoke before Parliament’s Treasury Committee earlier today, saying the outlook for inflation and growth is less benign. King said the MPC remained focused on meeting the CPI target, but surveys are suggesting the economy is beginning to slow. King said financial market turmoil has tightened credit conditions, and sees the first signs of credit crunch effect likely in housing and property markets. He anticipates output growth to slow while CPI to increase in the short term. King reiterated the Bank remained ready to take further measures to ensure the overnight rate remained in line with the bank rate. Meanwhile, Bank of England board member Blanchflower said that the fear of recession in the US is greater than others think, placing a 50% likelihood for a recession in the US.

Consumer credit for October increased to 1.439 billion sterling, up from 1.322 billion sterling. Mortgage approvals dropped to its lowest level since February 2005, at 88k versus 100k from September. Final M4 money supply edged up by 0.2% m/m and 11.8% y/y in October – marking its lowest annual rate since May 2006.Cable retreated sharply from just shy of 2.0850 yesterday and pulling back to trendline support around 2.0630 in early Thursday trading. We look for the pair to stabilize around the 2.06-figure and expect bullish momentum to push the pair back toward the 2.0850-2.09 region in the coming sessions.

Retailers Buoyed by Strong Holiday Start By Anne D'Innocenzio, AP Business Writer

2007-11-26T11:37:00.000+07:00

NEW YORK (AP) -- The nation's shoppers set aside worries about higher gas prices and a slumping housing market and proved their resilience over the Thanksgiving weekend, giving what the nation's merchants wished for -- a strong start to the holiday shopping season.Stores and malls opened the season as early as midnight, drawing bigger-than-expected crowds Friday for discounted flat-panel TVs, digital cameras and toys such as all things related to Disney Channel's "Hannah Montana." Strong sales continued through Saturday, according to one research group that tracks total sales at retail outlets across the country.

Clearly, the biggest draw was electronics, benefiting consumer electronics chains like Best Buy Co. and discounters such as Wal-Mart Stores Inc. and Target Corp. Popular-priced department stores including J.C. Penney Co. and Kohl's Corp. drew in crowds with good deals. Toy stores like Toys "R" Us Inc. fared well too. Still, apparel sales appeared to be mixed at mall-based clothing stores, though a cold weather snap helped spur sales of outerwear and other winter-related items.

"This was a really good start. ... There seemed to be a lot of pent-up demand," said Bill Martin, co-foundeer of ShopperTrak RCT Corp., which tracks total sales at more than 50,000 retail outlets. ShopperTrak reported late Sunday that sales on Friday and Saturday combined rose 7.2 percent to $16.4 billion from the same two-day period a year ago.

Total sales on Friday, the day after Thanksgiving, rose to $10.3 billion, up 8.3 percent from the same day a year ago. Martin had expected increases no greater than 5 percent.

Meanwhile, Internet research firm comScore Inc. reported a 22 percent gain in online sales on the day after Thanksgiving compared with the same day a year ago and estimated online sales would exceed $700 million online Monday, the official kickoff to the online shopping season.

The signs were encouraging, but stores are now wondering whether bargain hunters will keep up the pace as they face an escalating credit crunch, depreciating home values and rising daily living expenses.

Frederick Crawford, managing director at AlixPartners, a turnaround consulting company, said that amid economic challenges, people are buying fewer gifts.

"Clearly, it was mission-based shopping," Crawford said. "People had their list, and they were very specific in what they were looking for."

Consumers were out looking for bargains.

"The bargains are better this year, a lot better," said Theresa Calib, of Houston, Texas, who was at the local Greenspoint mall Saturday. "We always know what we want to get, and we get it." She noted she took advantage of Foot Locker Inc.'s two pairs for $89 sale.

I'm trying to get everything done, and I did it," said Pat Marcantonio, of Wakefield, R.I., who returned Saturday to the Warwick Mall after braving the crowds Friday morning.

Marcantonio also shopped for herself Saturday, loading up a Bath & Body Works bag full of frosted cranberry and sweet pea lotions. Bath & Body Works was offering select gift sets at 30 percent off.

Meanwhile, in downtown Philadelphia, Barbara McGlade, of Wyndmoor, Pa., had picked up deals on fleece clothing at Modell's, with prices marked down from $29.99 to about $15.

"If I see something now, I'll pick it up," McGlade said. "You don't know if you'll see it again."

The nation's stores worked hard to lure shoppers with expanded hours, including midnight openings, and a blitz of early morning specials Friday. J.C. Penney and Kohl's opened at 4 a.m., an hour earlier than a year ago.

Many stores were also more focused on discounting products that they knew shoppers wanted. Gail Lavielle, a spokeswoman at Sears Holding Corp., which operates Kmart and Sears stores, said it zeroed in on great deals on electronics, instead of offering deep discounts on a wide range of products. Still, analysts say frustrations were high across among shoppers who couldn't get their hands on limited deals at many different stores.

Lavielle noted that the turnout Friday was better than a year ago, and customer flow was steady throughout the weekend. Both Kmart and Sears sold out a significant inventory of its flat-panel TVs. Other hot items were Global Positioning System receivers, game consoles like the hard-to-find Nintendo Wii, and digital cameras.

Toys "R" Us chairman and CEO Jerry Storch said the toy seller drew a strong turnout Friday for its 101 early morning specials. He said that he was pleased with traffic on Saturday and Sunday as well.

"This was a robust start to the holiday season," Storch said. Popular items included anything related to Disney's hot franchises "Hannah Montana" and "High School Musical," video games, consoles, an interactive parrot from Hasbro Inc., and radio-controlled helicopters and planes.

In a statement Saturday, J.C. Penney reported "strong performance across all merchandise categories," including fine jewelry, outerwear, and young men's and children's assortments.

Wally Brewster, senior vice president of marketing and communications for General Growth Properties Inc., which operates more than 220 malls in 44 states, estimated that sales rose 2.5 percent for the weekend compared with a year ago, in line with projections. Electronic items were extremely popular, but he added that the cold weather helped spur sales of fleece outerwear and other winter items.

Karen MacDonald, spokeswoman at Taubman Centers, which operates 24 malls across 11 states, estimated that business was up anywhere from mid to high single digits Friday, while sales Saturday increased by as much as the mid-single digits.

Both Macerich Co. and Simon Property Group reported strong sales at malls across the country over the weekend.

Despite a decent showing, many shoppers interviewed said they planned to curb their spending.

Earl Lee, a mechanic from Live Oak, Fla., who was shopping in Tallahassee, said that he was planning on spending less this holiday season.

"Gas prices, everything's so high," he added.

John Muller, of Clifton, N.J., who was standing outside Macy's Herald Square in Manhattan on Sunday, said he plans to spend only about $500 this year, half as much as a year ago, because of higher expenses and worries about the economy.

This year, "we are mostly buying for the kids," said Muller, who has two children, ages 3 and 7.

AP Business Writer John Porretto in Houston and Associated Press writers Brent Kallestad in Tallahassee, Fla., and Kathy Matheson in Philadelphia contributed to this report.

GBP Pounded by BoE by Korman Tam

2007-11-24T23:47:00.002+07:00

The greenback was mixed in the Wednesday session, advancing versus the British pound and the yen while struggling against the euro and Aussie. With the exception of the sterling, the higher yielding currencies rallied against the yen as speculators continued to jump back into the carry trades following the sharp unwinding of recent sessions.

Economic data from the US were largely softer than expectations. The October PPI increased by 0.1% on a monthly basis, down from a 1.1% increase previously while the annualized PPI jumped to 6.1% from 4.4% previously. Core PPI was flat on a monthly basis versus 0.1% previously, but the yearly core PPI jumped to 2.5%, from 2.0%. Meanwhile, retail sales for October were weaker with the headline report inline with estimates at 0.2%, but down from the previous month at 0.6%. The excluding-autos retail sales figure missed expectations, down to 0.2% versus 0.4% a month earlier.

Bank of Canada Deputy Governor Jenkins expressed concern over the rapid appreciation in the Canadian dollar, saying the recent rise is stronger than historical experience have suggested. He said that Canada has been bearing a disproportionate share of adjustment in global imbalances. He warned that if the Loonie remains at current levels, there will be increased risks of significantly lower inflation and output.GBP Pounded By BoE

The sterling plunged 1.4% from its session highs against the dollar and 1.6% versus the yen after a report from the Bank of England not only tempered expectations for future rate hikes but raised the scope for a shift in stance toward potential rate cuts in the coming months. The BoE sees inflation reaching its 2% target in two years using market rates, which, were based on the Bank’s assumption for two 25-basis point rate cuts.

Economic data released from the UK saw the September ILO unemployment rate remain unchanged at 5.4%. The claimant count for October was -9.9k versus a prior reading of -12.8k while 3-month average earnings in September crept higher to 4.1% from 3.7%.

Cable fell by nearly three-big figures on the session relinquishing all of its previous day’s gains to 2.0550. Support is seen at 2.0520, followed by 2.05 and 2.0465. Additional floors will emerge at 2.0420, backed by 2.04 and 2.0360. On the upside, resistance is eyed at 2.06, followed by 2.0640 and 2.0685. Subsequent ceilings are seen at 2.07, backed by 2.0730 and 2.0770.

Data Caps USD Gains by Korman Tam

2007-11-24T23:47:00.001+07:00

The greenback posted its largest weekly gain on a trade-weighted basis in a month despite relinquishing its grip in Friday trading. Nevertheless, lingering fears over credit conditions and the credibility of banks’ balance sheets continue to plague the currency. Accordingly, the currency market will continue to be closely correlated with equity market moves – particularly the trajectory of the carry trade pairs, amid times of heightened volatility.Economic data released earlier in the session derailed the dollar’s rebound against the majors, pushing it toward session lows versus the euro and sterling. Industrial production for October fell by 0.5%, missing expectations for a 0.1% increase and reversing the previous month’s 0.2% increase. The decline in industrial production also marked its largest drop in over two-years, reinforcing fears that the housing slowdown continues to weigh on manufacturing. Capacity utilization was largely inline with expectations at 82.0%, down marginally from the previous month at 82.1%. The September TICs report revealed a net outflow of $14.7 billion versus a downward revised outflow of $150.7 billion in the prior month.

Fed Board Member Kroszner downplayed the prospects for another FOMC rate cut over the coming year, saying “the current stance of monetary policy should help the economy weather the rough patch during the next year, with growth then likely to return to its longer-run sustainable rate”. Fed members have been tempering market expectations for another 25-basis point rate cut at the December FOMC meeting particularly after market sentiment in October fully discounted an ease despite the actual decision being much closer than expectations suggested. Kroszner reiterated the FOMC’s statement from October, saying downside risks to economic growth appear to be roughly balanced by the upside risks to inflation – maintaining the Fed’s neutral stance.

Traders will turn their attention to comments from the upcoming G20 Finance Ministers meeting this weekend in South Africa. Given the growing unease among government officials over the dollar’s rapid decline, we look for discussion on global imbalances as well as currency valuation. The more likely focus will be on China’s rigid exchange-rate regime, rather than the dollar’s accelerated declines over the past few months. US Treasury Secretary Hank Paulson reiterated that he expects currency issues to be deliberated this weekend, while BoE Governor King stressed the need for greater currency flexibility to alleviate “great currency tensions”.

Yen Gained On Risk Aversion by Yan Xu

2007-11-24T23:45:00.000+07:00

The yen rose across the board as investors reduced exposure to risk on concern tightening credit conditions and rising energy prices may impede economic growth. Besides, many in the market unloaded positions in risky assets before Thanksgiving. The currency gained as carry trades were unwound.

The dollar fell below 109 against the yen for the first time since June 2005. The sterling dipped to as low as 222.48 from 227.50 versus the yen, while the euro fell to 160.10 against the yen.The dollar continued its weakness after the Fed minutes release yesterday. Also, the currency fell further as oil surged toward 100 dollars per barrel. The dollar reached an all-time low at 1.4855 versus the euro.

The minutes showed the rate cut decision in October was “a close call”. The Fed said that lower economic growth forecast for next year was due to weak housing, credit tightness, and costlier oil. The minutes added to the bearish market sentiment over the greenback.

US leading indicators dropped 0.5% in October, below the estimate of a 0.3% decline and a 0.3% gain in the previous month. University of Michigan consumer sentiment fell from 80.9 to 76.1 in November.

The Bank of England November policy meeting minutes showed a 7-2 vote in favor of holding interest rates at 5.25%. The sterling fell to as low as 2.0529 versus the dollar after the release of the minutes.

Thursday trading will be thin due to US Thanksgiving holiday.

EURUSD will face interim resistance at 1.4870, followed by 1.49 and 1.4930. Additional ceilings will emerge at 1.4950, backed by 1.50. Support starts at 1.4830, backed by 1.48, 1.4780 and 1.4750. Subsequent floors are eyed at 1.47.

GBPUSD encounters interim resistance at 2.0680, backed by 2.07 and 2.0750. Subsequent ceilings will emerge at 2.08, followed by 2.0830 and 2.0850. On the downside, support begins at 2.0630, followed by 2.06 and 2.0580. Additional floors are eyed at 2.0530, backed by 2.05 and 2.0450.

USDJPY encounters interim resistance at 109, backed by 109.20 and 109.50. Subsequent ceilings will emerge at 109.80, followed by 110 and 110.50. On the downside, support begins at 108.50 and 108.20, followed by 108. Additional floors are eyed at 107.80, backed by 107.50 and 107.

OPEC Interested in Non-Dollar Currency By Sebastian Abbot, Associated Press Writer

2007-11-19T10:39:00.000+07:00

RIYADH, Saudi Arabia (AP) -- Iranian President Mahmoud Ahmadinejad said Sunday that OPEC's members have expressed interest in converting their cash reserves into a currency other than the depreciating U.S. dollar, which he called a "worthless piece of paper."His comments at the end of a rare summit of OPEC heads of state exposed fissures within the 13-member cartel -- especially after U.S. ally Saudi Arabia was reluctant to mention concerns about the falling dollar in the summit's final declaration.

The hardline Iranian leader's comments also highlighted the growing challenge that Saudi Arabia, the world's largest oil producer, faces from Iran and its ally Venezuela within the Organization of Petroleum Exporting Countries.

"They get our oil and give us a worthless piece of paper," Ahmadinejad told reporters after the close of the summit in the Saudi capital of Riyadh. He blamed U.S. President George W. Bush's policies for the decline of the dollar and its negative effect on other countries.

Oil is priced in U.S. dollars on the world market, and the currency's depreciation has concerned oil producers because it has contributed to rising crude prices and has eroded the value of their dollar reserves.

"All participating leaders showed an interest in changing their hard currency reserves to a credible hard currency," Ahmadinejad said. "Some said producing countries should designate a single hard currency aside from the U.S. dollar ... to form the basis of our oil trade."

Venezuelan President Hugo Chavez echoed this sentiment Sunday on the sidelines of the summit, saying "the empire of the dollar has to end."

"Don't you see how the dollar has been in free-fall without a parachute?" Chavez said, calling the euro a better option.

Saudi Arabia's King Abdullah had tried to direct the focus of the summit toward studying the effect of the oil industry on the environment, but he continuously faced challenges from Ahmadinejad and Chavez.

Iran and Venezuela have proposed trading oil in a basket of currencies to replace the historic link to the dollar, but they had not been able to generate support from enough fellow OPEC members -- many of whom, including Saudi Arabia, are staunch U.S. allies.

Both Iran and Venezuela have antagonistic relationships with the U.S., suggesting their proposals may have a political motivation as well. While Tehran has been in a standoff with Washington over its nuclear program, left-wing Chavez is a bitter antagonist of Bush. U.S. sanctions on Iran also have made it increasingly difficult for the country to do business in dollars.

During Chavez's opening address to the summit on Saturday, the Venezuelan leader said OPEC should "assert itself as an active political agent." But Abdullah appeared to distance himself from Chavez's comments, saying OPEC always acted moderately and wisely.

A day earlier, Saudi Arabia opposed a move by Iran on Friday to have OPEC include concerns over the falling dollar included in the summit's closing statement after the weekend meeting. Saudi Arabia's foreign minister even warned that even talking publicly about the currency's decline could further hurt its value.

But by Sunday, it appeared that Saudi Arabia had compromised. Though the final declaration delivered Sunday did not specifically mention concern over the weak dollar, the organization directed its finance ministers to study the issue.

OPEC will "study ways and means of enhancing financial cooperation among OPEC ... including proposals by some of the heads of state and governments in their statements to the summit," OPEC Secretary General Abdalla Salem el-Badri said, reading the statement.

Iran's oil minister went a step further and said OPEC will form a committee to study the dollar's affect on oil prices and investigate the possibility of a currency basket.

"We have agreed to set up a committee consisting of oil and finance ministers from OPEC countries to study the impact of the dollar on oil prices," Gholam Hussein Nozari told Dow Jones Newswires.

Iraqi Oil Minister Hussein al-Shahristani said the committee would "submit to OPEC its recommendation on a basket of currencies that OPEC members will deal with." He did not give a timeline for the recommendation.

The meeting in Riyadh, with heads of states and delegates from 13 of the world's biggest oil-producing nations, was the third full OPEC summit since the organization was created in 1960.

Abdullah tried to take the focus off the dollar debate, announcing the donation of $300 million to set up a program to study the effect of the oil industry on the environment. Kuwait, Qatar and the United Arab Emirates also agreed to donate $150 million each to the fund, Prince Saud Al-Faisal, Saudi Arabia's foreign minister, said Sunday.

The run-up to the meeting was dominated by speculation over whether OPEC would raise production following recent oil price increases that have approached $100. But cartel officials have resisted pressure to increase oil production and said they will hold off any decision until the group meets next month in Abu Dhabi, United Arab Emirates.

They have also cast doubt on the effect any output hike would have on oil prices, saying the recent rise has been driven by the falling dollar and financial speculation by investment funds rather than any supply shortage.

During his final remarks, el-Badri stressed he was committed to supply -- but did not mention changing oil outputs.

"We affirm our commitment ... to continue providing adequate, timely, efficient, economic and reliable petroleum supplies to the world market," he said.

Barclays Taking $2.7 Billion Writedown By Jane Wardell, AP Business Writer

2007-11-15T23:20:00.000+07:00

LONDON (AP) -- Barclays Group PLC took a $2.7 billion writedown for losses on securities linked to the U.S. subprime mortgage market collapse -- less than the market had expected -- in a surprise trading update on Thursday.Barclays, which was not due to provide an update until later this month, revealed the loss in its Barclays Capital investment unit following investor criticism over its silence and after market rumors over the past week of a much larger writedown weighed heavily on its share price.

Shares in the bank jumped more than 6 percent after the update showing a 500 million pound ($1.03 billion) writedown in the July-to-September quarter and a 800 million pound ($1.66 billion) writedown in October.

However, the gains were lost later in the session -- the stock slipped 1.2 percent to 526.5 pence ($10.78 in afternoon trading -- as analysts factored in expectations of restricted growth at Barclays Capital next year and ongoing uncertainty in debt markets. Its U.S.-traded shares fell 82 cents to $43.06, down 1.9 percent.

Barclays Capital chief Bob Diamond acknowledged that the market would need much more time to get over recent subprime issues.

"Subprime will be in work-out for a couple of years, there's no doubt about it," he said.

Diamond said there was no risk of further writedowns of Barclays' residential mortgage-backed securities collateralized debt obligations, or CDOs.

Barclays declined to say if it would make additional writedowns from exposure in other parts of its business.

The Barclays statement came a day after HSBC Holdings PLC, Europe's biggest bank, reported that it took a $3.4 billion impairment charge at its U.S. consumer finance division, HSBC Finance Corp.

HSBC also warned that its bad debts could increase if the U.S. housing market weakens further -- but like Barclays, reassured investors that third-quarter profits for its global business were ahead of last year.

Barclays said that net income and profit before tax for the 10 months to Oct. 31 beat last year's record results as good performances in Europe, Asia and the U.K. helped offset problems related to the U.S. crisis in mortgages to borrowers with poor credit histories.

"In announcing as we are very strong performance, indeed record performance, for the first 10 months of the year, I think we're able to give strong reassurance to our shareholders that they have nothing to worry about," said Chief Executive John Varley.

The scale of the losses were "certainly not in line with the worst-case scenario which some had been factoring in and, indeed, Barclays Capital as a whole improved on its 2006 performance -- quite an achievement given the wider global trading concerns," said Richard Hunter, an analyst at Hargreaves Lansdown Stockbrokers.

Collins Stewart analyst Alex Potter noted that Barclays' writeoff level was 7 percent, based on a total of 18.4 billion pounds ($37.7 billion) of exposure to U.S. subprime and leveraged finance. That put it well ahead of its investment banking peers in the range of 3 percent to 5 percent, he said.

"We cannot categorically state that this is the end of the writedowns but this gives us confidence," said Potter, who rated Barclays shares as a long-term buy.

Striking a skeptical note, however, Bear Stearns analyst Robert Sage commented: "We still remain unconvinced on the outlook for Barclays given its revenue growth outlook, although we expect this statement to result in a positive bounce for the shares."

Barclays said it would provide a full third-quarter update as originally scheduled on Nov. 27.

http://www.investorrelations.barclays.co.uk

Blackstone Posts 3Q Loss on IPO Charges By Joe Bel Bruno, AP Business Writer

2007-11-13T16:49:00.000+07:00

NEW YORK (AP) -- Blackstone Group LP President and Chief Operating Officer Hamilton James said Monday the slumping private-equity market might not fully rebound until major Wall Street banks get a better handle on the credit crisis."The mortgage black hole is worsening...it is deeper, darker, scarier than what the banks originally thought," he told analysts during a conference call. "My sense is they don't have a clear picture of how this will play out, and their confidence is low."

James said the banks -- pressured by massive writedowns from losses linked to subprime mortgages -- will keep lending standards tight for the time being. He believes the market for leveraged loans, which buyout funds use to finance deals, appears to be picking up after a crippling summer.

Banks like Citigroup Inc. and JPMorgan Chase & Co. are doing a good job in selling an estimated $300 billion of backlogged debt committed to leveraged buyouts, he said. But, James doesn't see most of the subprime mess -- and a full rebound in the debt markets -- until sometime next year.

Blackstone's third-quarter loss was pinned on charges related to its initial public offering and lower real-estate fees. The buyout shop posted losses of $113.2 million, or 44 cents per share, which included the impact of $802.6 million of non-cash charges for compensation and other items linked to its IPO.

Stripping out those charges, the New York-based buyout fund reported a profit of $234 million, or 21 cents per share. Analysts polled by Thomson Financial expected a profit of 30 cents per share and Blackstone shares fell more than 6 percent Monday.

Revenues rose to $526.7 million from $461.5 million a year earlier. Deals signed during the quarter included Blackstone's $20 billion acquisition of Hilton Hotels.

It was Blackstone's first full quarter operating as a public company after its debut on the New York Stock Exchange in June. The company was founded in 1985 by Stephen Schwarzman and Peter G. Peterson, and its IPO was one of the most heavily watched amid a boom in big private equity deals during the past few years.

Yet the stock is down some 38.9 percent since Blackstone went public, and fell $2.02, or 8.3 percent, to $22.26 Monday.

Schwarzman said the tightening global credit conditions created a "dampening effect" for new corporate buyouts, though he believes many sellers will lower their price expectations going forward.

"While it will be difficult to structure very large leveraged transactions in corporate private equity and real estate until the credit markets improve, pricing of assets is more favorable," said Schwarzman, the company's chairman and chief executive, in a statement.

Revenue from Blackstone's largest business, corporate private equity, rose 42 percent to $227.3 million. The business also posted transaction fees of $11.9 million.

Meanwhile, the company's hedge fund business rose 88 percent to $124.9 million during the quarter. Blackstone took advantage of market volatility during the quarter, securing big gains from its hedge and proprietary trading funds.

The same volatility sliced into Blackstone's real estate group, which dropped 44 percent to $109.1 million. The drop was blamed on weakness in commercial real estate stemming from declines in subprime residential lending.

The real estate business operates companies like Equity Office Properties Trust, which it acquired earlier this year. It also controls hotels and resorts through the Hilton acquisition.

Blackstone owns broad swath of businesses -- from London Eye and Legoland operator Merlin Entertainment Group to Pinnacle Foods Corp. -- but hopes that those interests would sustain profits during a rough quarter failed to materialize.

Oil Prices Drop in Asian Trading By Gillian Wong, Associated Press Writer

2007-11-13T16:40:00.000+07:00

SINGAPORE (AP) -- Oil prices dropped Tuesday after a key OPEC member left open the possibility the oil cartel will increase output to curb rising prices, and following the strengthening of the U.S. dollar overnight.Saudi Arabian Oil Minister Ali al-Naimi said production will be discussed when the Organization of Petroleum Exporting Countries meets next month in Abu Dhabi in the United Arab Emirates.

Light, sweet crude for December delivery fell 6 cents to US$94.56 a barrel in Asian electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract fell US$1.70 to settle at US$94.62 a barrel Monday.

The long-term impact of another increase in oil production by OPEC isn't clear. A previous 500,000 barrel a day increase in production, which went into effect Nov. 1, was widely viewed as too little too late to stop crude's run-up to near $100 a barrel. Crude prices rose 42 percent between late August and last week, when they reached a record of US$98.62 a barrel.

A rebound in the U.S. dollar Monday also pressured crude prices. Oil futures offer a hedge against a weak dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the U.S. currency is falling. Many analysts blame speculative investing driven by the falling dollar for the rally in crude prices over the past two-and-a-half months.

Oil prices were dampened as well by worries over the U.S. economy as Wall Street fell its fourth straight session on expectations of further fallout from the ongoing credit crisis. The Dow Jones industrials ended below 13,000 for the first time since August.

Oil prices could be volatile this week due the expiration of crude options on Tuesday and the expiration of the December crude contract Friday.

Investors will have plenty of additional supply and demand data to chew on. On Tuesday, the International Energy Agency will issue its monthly report on crude supplies and demand. On Thursday, the Energy Department's Energy Information Administration will issue its weekly inventory report.

The EIA report is expected to show U.S. crude oil inventories fell 300,000 barrels last week, according to the average estimate of analysts polled by Dow Jones Newswires. Gasoline inventories, on average, likely fell 100,000 barrels, while distillate stocks were expected to fall 300,000 barrels. Refinery use likely rose 0.7 percentage point to 86.9 percent of capacity.

In London, December Brent crude fell 58 cents to US$91.40 a barrel on the ICE Futures exchange.

Heating oil futures fell 0.05 cent to US$2.5816 a gallon (3.8 liters) while gasoline prices fell 0.7 cent to US$2.4095 a gallon.

Natural gas futures rose 0.3 cent to US$7.964 per 1,000 cubic feet.

Chinese Banks Branch Out By RICK CAREW

2007-11-12T05:24:00.000+07:00

The first approval in more than a decade for a Chinese bank to open a U.S. branch could open the way for others and raises hopes that Beijing, in turn, will open its financial markets wider to American firms.

China Merchants Bank Co., the country's sixth-largest bank by assets and widely viewed as one of its best-managed, won approval from the U.S. Federal Reserve last week to set up a branch in New York. An application by China's biggest bank, Industrial & Commercial Bank of China Ltd., is pending with regulators, and the Chinese lender hopes to get a green light soon.

For Chinese banks, a New York branch offers an outpost at the heart of the world's financial system. That allows them to better serve their traditional Chinese clients, who are building U.S. links and managing growing amounts of foreign exchange. Chinese companies also need global financing for the rising number of overseas acquisitions they are making.

"We've now met the world's most stringent regulatory standard," China Merchants Bank President Ma Weihua told reporters Friday. "We can now provide better financial support for Chinese companies as they go abroad."

The approval will give U.S. Treasury Secretary Henry Paulson more clout when he visits Beijing in December for the next round of the U.S.-China Strategic Economic Dialogue. Chinese regulators and bankers have repeatedly complained that they have allowed foreign banks like Citigroup Inc. to build dozens of outlets in China while the U.S. has withheld branch approvals for Chinese banks.

China Construction Bank Corp. Chairman Guo Shuqing, a former central banker and a top candidate to take up another regulatory post in the future, took U.S. authorities to task last month for not opening up more to Chinese banks.

"This is unequal, because we are fairly open to U.S. banks in China," he told reporters during a Communist Party meeting. "In the past, our banks had poor capital adequacy and bad operations, but now the situation has changed radically."

Starting in 2002, China's government embarked on a round of banking overhauls that included pouring tens of billions of dollars into state banks, peeling off mounds of nonperforming loans and listing bank shares in massive initial public offerings. Those overhauls, combined with a rebound in profits in the Chinese corporate sector, have put China's banks on a stronger financial footing.

China Construction Bank is 8.2%-owned by Bank of America Corp.

David Loevinger, U.S. Treasury attache in Beijing, said that ahead of December's dialogue, the U.S. will encourage China to further open up to foreign competition in the financial sector.

Among the main goals for the U.S. are getting China to grant broader access to foreign-invested companies in securities trading and to raise foreign-ownership caps on investments in Chinese banks. Mr. Paulson argues that more foreign participation will strengthen China's financial system and let Beijing adopt a more flexible currency regime faster without threatening stability. The U.S. has been urging China to let the yuan appreciate faster, as an undervalued yuan helps swell the big trade deficit the U.S. runs with the country.

China currently caps total foreign ownership in a domestic bank at 25% and limits a single foreign shareholder to 20%. Lou Wenlong, a midlevel official at China's banking regulator, speaking to reporters Friday after the Fed's decision, said he thought existing foreign-ownership caps are "suitable" for now. A task force of Chinese banking regulators is studying the impact of foreign participation on the banking sector and could recommend lifting the caps or keeping them at the current levels early next year when it delivers its report.

At present, only two Chinese banks operate U.S. branches: Bank of China Ltd. and Bank of Communications Co. Both of those banks were approved to set up New York branches before the U.S. tightened foreign-bank-supervision laws in 1991, in the wake of an international money-laundering and fraud scheme involving Pakistan-based Bank of Credit & Commerce International, or BCCI.

In weighing China Merchants Bank's branch application, the Federal Reserve put emphasis on judging its home regulator's supervision capabilities and China's efforts to prevent money laundering. After the May meeting of the bilateral economic dialogue in Washington, the U.S. agreed to support China's membership in the Financial Action Task Force on Money Laundering, and Beijing joined the body in late June. That imprimatur will likely encourage more Chinese banks to apply for branches in coming months.

The Fed said the China Merchants Bank branch will be allowed to engage in wholesale deposit-taking, lending, trade finance and other banking services.

Another midsize lender, China Minsheng Banking Corp., agreed in October to buy a 9.9% stake in San Francisco-based UCBH Holdings Inc. for as much as $317 million, marking the first strategic investment in a U.S. bank by a Chinese lender. UCBH specializes in providing retail banking and small business services to Chinese communities in the U.S.

Midsize Chinese banks such as China Merchants are expanding at home as well. The bank said Friday it plans to buy a 10% stake in Taizhou City Commercial Bank Corp.

Investors Brace for More Bad Bank News

2007-11-12T05:20:00.000+07:00

NEW YORK (AP) -- The stock market this week is hoping for signs that the economy is surviving the problems in the financial sector -- and that the Federal Reserve will come to the rescue if it's not.

Investors are slowly getting a clearer picture of how much in risky and deteriorating debt securities the world's major financial institutions are holding, and they don't like what they see.Wall Street already expects banks' portfolios to lose at least $20 billion in the fourth quarter, after announcements of anticipated writedowns of mortgage-backed securities and other debt instruments by such financial institutions as Citigroup Inc., Morgan Stanley and Wachovia Corp.

Investors have been bracing for fourth-quarter writedowns for a while, but the amount was larger than many were prepared to hear. As a result, volatility has returned to virtually all corners of Wall Street.

After huge swings in either direction, the Dow Jones industrial average finished last week down 4.06 percent, and the Standard & Poor's ended down 3.71 percent.

The Nasdaq composite index was hit the hardest last week, as investors' optimism vanished about the technology sector being isolated from the slowing economy and problems in the financial markets. The Nasdaq ended the week down 6.49 percent.

Meanwhile, gold lifted further above $800 an ounce to its highest levels since 1980, and crude-oil briefly breached $98 a barrel, as the dollar plunged.

The combination of shaky financial markets and inflationary triggers has worried investors that the Fed's hands are tied. An interest rate cut could send the dollar down even further, but keeping rates where they are might translate to even wider losses for the world's major financial institutions.

On Oct. 31, the Fed lowered key interest rates by a quarter point, as expected, after reducing rates by a half-point in September. But the central bank suggested that it may stop cutting rates when it meets Dec. 11.

Mild readings on producer prices and consumer prices -- which will be reported on Wednesday and Thursday, respectively -- could help calm the market. As of last Friday, economists surveyed by Thomson/IFR predicted, on average, that both the core Producer Price Index and the core Consumer Price Index will have risen by 0.2 percent.

Wall Street will also want to see strong October retail sales detailed in the Commerce Department's Wednesday report, and solid readings on October industrial production and capacity utilization on Friday.

And there are still a few major earnings reports left for investors to read to gauge U.S. business growth and the health of the consumer. Tyson Foods will post its quarterly results on Monday; Home Depot Inc. and Wal-Mart Stores Inc. release their third-quarter results Tuesday; Macy's Inc. reports Wednesday; and Starbucks Corp. reports Thursday.The bond market is closed Monday for Veterans Day, but the stock market is open.

Fed adds $6.25 bln in temporary reserves via 3-day repo

2007-11-03T01:06:00.000+07:00

NEW YORK, Nov 2 (Reuters) - The U.S. Federal Reserve said on Friday it added $6.25 billion of temporary reserves to the banking system through a 3-day repurchase agreement.

Federal funds were trading steady at 4.56 percent in the market after the operation amount was announced, above the 4.50 percent target rate the Fed sets.

The Fed said collateral accepted in the operation was $4.569 billion in agency debt, $481 million in mortgage-backed securities and $1.2 billion in Treasuries.

A total of $62.85 billion in bids were submitted for the operation.

Bank of New York CFO Exercises Options

2007-11-03T01:04:00.000+07:00

WASHINGTON (AP) - The vice chairman and chief financial officer of Bank of New York Mellon Corp. exercised options for 87,652 shares of common stock, according to a Securities and Exchange Commission filing.

In a Form 4 filed Thursday with the SEC, Bruce Van Saun reported he exercised the options Tuesday for $24.52 and $37.70 apiece and then sold 85,000 shares on the same day for $47.80 to $47.97 apiece.

He also surrendered 2,084 shares the same day back to the company for $47.98 apiece. Insiders can surrender shares as a way to cover either taxes or the cost of exercising options.

Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.

3 ways to follow the Fed's rate cut by Brigitte Yuille bankrate.com

2007-11-03T01:01:00.000+07:00

The Federal Reserve's decision to cut a key interest rate may have given you the break you need to avoid financial pitfalls and improve your financial situation.

The Federal Open Market Committee lowered the federal funds rate a quarter of a point, to 4.5 percent, in an effort to stimulate the economy and forestall effects from the housing market slump.The interest rate cut lowers the cost of borrowing money and provides consumers the opportunity to take advantage of the reduced cost, explains Michelle Jones, vice president of counseling at the Consumer Credit Counseling Service of Greater Atlanta.

The counseling agency suggests that you may benefit from the following moves:

Consolidate your debt
This is a good opportunity for you to make your debt more affordable and payments more predictable. Gather all your high-interest balances and put them into one low, fixed monthly payment.

Get a better loan
Call up your bank and find out if it has cut rates on various loans. If you have any high-interest-rate loans or loans with adjustable rates, you can speak with a loan officer to see if you can get a fixed-rate loan at a lower interest rate instead.

Struggling homeowners have a good opportunity here, says Jones.

"Lenders may be willing to refinance to a fixed-rate mortgage even if you are one or two payments behind on a recently adjusted ARM," says Jones.

She says this is possible because the lender wants to see if your current delinquency resulted from an increase of your mortgage payment.

Also, check to see if the current rate on your home equity loan or line of credit will drop as well as your monthly payment. If it doesn't, find out if competing banks have lower rates.

Jones warns that using a home equity loan to pay off credit cards is not the right answer for everyone, no matter how low the interest rates. She says for a home equity loan to work, you have to be able to afford your living expenses without relying on the cards.

If you've reduced credit card debt and have been making timely payments, you may qualify for a lower interest rate. Take this time to shop around and find a lender.

Save money
Now that you've made some adjustments, the money that would have gone toward those high-interest payments can be used for other opportunities, such as starting a retirement savings plan or repaying debt more quickly.

Chevron 3Q Profit Falls by More Than $1B By Michael Liedtke, AP Business Writer

2007-11-03T01:00:00.000+07:00

SAN RAMON, Calif. (AP) -- Chevron Corp.'s third-quarter profit plunged even further than analysts feared, driven by the second largest U.S. oil company's inability to recover its higher refining costs at the gasoline pump.The San Ramon-based company said Friday that it earned $3.72 billion, or $1.75 per share, for the three months ended in September. That represented a 26 percent decline from net income of $5.02 billion, or $2.29 per share, at the same time last year.

Analysts were bracing for a lower profit, but the erosion was worse than their average earnings estimate of $2.07 per share, based on a poll by Thomson Financial.

Revenue growth also was lackluster during the quarter, edged up just 2 percent to $55.2 billion.

Investors expressed their disappointment as Chevron shares fell $1.27 to $87.77 in morning trading Friday.

Chevron Chairman David O'Reilly blamed the earnings letdown mostly on gas prices that lagged the company's higher costs for crude oil -- the main ingredient in petroleum.n a change from recent years, the United States had an ample supply of gasoline during the third quarter. While that was good news for motorists as summertime gasoline prices remained relatively stable, it stung Chevron and its industry peers as their oil costs climbed.

The conditions saddled Chevron with a $110 million loss in its U.S. division that refines and sells gasoline. That was a dramatic reversal of fortune from last year when the same division earned $831 million.

Chevron also was negatively affected by reduced refining capacity. Besides shutting down part of its El Segundo, Calif. refinery for planned maintenance, Chevron lost some production after a mid-August fire at its Mississippi refinery. Chevron doesn't expect to fully repair the Mississippi refinery until next year.

As usual, Chevron made most of its money from oil production, but not as much as it did last year. The company's worldwide profit in its so-called "upstream" operations slipped 2 percent to $3.43 billion, a downturn that management attributed the downturn to lower production and higher operating expenses during the quarter.

Chevron produced an average of 2.6 million barrels of oil per day, down by about 100,000 barrels per day from last year.

Third-quarter profits at most of the world's other major publicly traded oil companies also fell during the quarter, ranging from a 5 percent decline at ConocoPhillips to a 29 percent drop at BP PLC.

Royal Dutch Shell PLC broke the trend with a 16 percent increase in its third-quarter profit, but the company said refining margins were weaker than the results made it appear.

European Shares Slip After Dow's Plunge By Toby Anderson, AP Business Writer

2007-11-03T00:58:00.000+07:00

LONDON (AP) -- Global stock markets dropped Friday, tracking losses on Wall Street as investors worried about residual effects of the credit crisis and the strength of the U.S. economy, despite better-than-expected U.S. unemployment figures.The data from the U.S. labor department showed that employers boosted their payrolls by a surprisingly strong 166,000 in October, the most in five months, in a positive sign for the nation's employment climate amid the strains of a housing collapse and credit crunch.

In Europe, the FTSE-100 index in London dropped 1.4 percent to 6,496.00, while Germany's DAX index fell 0.8 percent to 7,820.54 and France's CAC-40 index declined 0.9 percent to 5,678.78.

The Dow Jones industrial average fell 0.5 percent to 13,502.02, pulling back after rising in the opening minutes. Broader stock indicators also fell.

Repeating a pattern seen several times this year, a sharp sell-off in U.S. stocks Thursday prompted investors to dump shares. The Dow Jones industrial average tumbled more than 360 points Thursday as investors reacted nervously to surging oil prices and a smaller-than-expected gain in U.S. consumer spending for September.

A warning about inflation Wednesday from the U.S. Federal Reserve when it cut rates also triggered concern that the U.S. central bank might hold off on further rate cuts or even consider raising them if inflation accelerates. That is renewing worries about a slowdown in the U.S. economy -- a vital market for exporters.

"I'm not expecting a serious sell-off, but I think Asian markets are responding to a genuine change in the overall outlook -- that the Fed is not going to be as aggressive in cutting rates," said Tim Rocks, Asia Strategist at Macquarie Bank in Hong Kong.

"But you'll certainly see a slower pace in gains," Rocks said. "The Fed's attitude is going to put a lid on markets."

Jitters over the fallout from the subprime mortgage crisis -- which roiled markets in August -- will linger for a while, traders said.

Japan's benchmark Nikkei 225 index tumbled 352.92 points, or 2.1 percent, to finish at 16,517.48, dragged down by financial shares. Mitsubishi UFJ Financial Group dropped 6 percent following a recent revision of its profit outlook on weak domestic lending, while Mizuho Financial Group fell 5.7 percent.

Banking shares in London followed the trend, with Barclays dropping 6.5 percent and Royal Bank of Scotland off 4.7 percent. HSBC fell 2.3 percent.

In Hong Kong, the blue chip Hang Seng Index sank 3.25 percent to close at 30,468.34. The index is still up 52.6 percent this year.

The stunning ascent this year in many Asian markets has been punctuated by occasional drops, usually sparked by plunges on Wall Street, which seem to be taken as cues by investors to unload shares that may have risen too high, too quickly. So far this year, each time Asian markets have dropped sharply, nearly all have quickly bounced back and climbed higher.

The benchmark Shanghai Composite Index fell 2.3 percent, while Singapore's Straits Times index fell 2.3 percent to 3,715 and the Korea Composite Stock Price Index, or Kospi, fell 2.1 percent to close at 2,019.34.

In Asia, markets plummeted as investors worried about a possible end to U.S. interest rate cuts and a slowing American economy. Hong Kong's benchmark index plunged over 3 percent and markets in Japan, China, South Korea and Singapore fell more than 2 percent.

Wall Street Waffles After Jobs Report By Tim Paradis, AP Business Writer

2007-11-03T00:56:00.000+07:00

NEW YORK (AP) -- Wall Street waffled Friday after a surprisingly strong October jobs report failed to alleviate escalating worries about the beleaguered financial sector.

The Labor Department said employers added 166,000 jobs to their payrolls in October, the most since May. The figure was nearly double what economists had expected, according to a Thomson/IFR survey. The unemployment rate held steady at 4.7 percent, in line with September and analysts' consensus forecast.But Wall Street was clearly still shaky after Thursday's sharp pullback, which took the Dow down more than 360 points -- the fourth biggest drop of the year. The market has been mercurial lately, with economic data coming in mixed and the possibility of interest rate cuts ending, and Friday's trading saw the major indexes alternating between gains and losses.The biggest losers in the stock market Friday, as they have been in the past few months, were financial institutions -- including Merrill Lynch & Co., Washington Mutual Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. Multiple analysts have issued research notes in recent days expressing concern about banks' and brokerages' exposure to the tight credit markets and the likelihood of subprime mortgage problems spilling into other types of consumer debt.t's likely that as strong as the jobs number was, investors will need to see more evidence of a stronger economy and more stability in the credit markets before they can make any major commitments to stocks.

"I think there is a lot of uncertainty in the markets about the financial institutions in particular," said Subodh Kumar, global investment strategist at Subodh Kumar & Assoc. in Toronto. "This market will remain volatile until these issues are resolved or until it's had a full 10 percent correction," he said, referring to unease about the extent of write-downs of soured debt.

In midday trading, the Dow fell 19.02, or 0.14 percent, to 13,548.85, after falling more than 100 points earlier in the session.

Broader stock indicators were mixed. The Standard & Poor's 500 index fell 2.58, or 0.17 percent, to 1,505.86, while the Nasdaq composite index rose 8.17, or 0.29 percent, to 2,803.00.

Bond prices rose as investors pulled more money out of stocks. The yield on the 10-year Treasury note, which moves opposite the price, fell to 4.32 percent from 4.35 percent late Thursday.

This week has brought a jumble of contradictory economic news.

The market on Thursday was unnerved by news that consumers cut back their spending in September and that the manufacturing sector expanded in October at the slowest pace since March. But earlier in the week, an initial estimate of third-quarter economic growth came in stronger than economists had expected, at 3.9 percent.

Oil prices rebounded on the New York Mercantile Exchange, after dropping sharply Thursday. Prices have been exceptionally volatile in recent days as the market treads through record territory. A barrel of oil jumped $1.65 to $95.14.

The dollar traded mostly lower against other major currencies. The euro bought a record $1.4525 on Friday.

The concerns about the financial sector continued to dominate. Citigroup, fresh off its biggest decline in four years on Thursday, fell anew Friday amid concerns about the bank's capital position. An analyst downgrade on the biggest U.S. bank hastened the stock's fall Wednesday.

Citi fell $1.43, or 3.7 percent, to $37.10.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 764.5 million shares.

The Russell 2000 index, which tracks the performance of small-company stocks, fell 0.45, or 0.06 percent, to 794.73.

European stock markets followed Wall Street lower. Britain's FTSE 100 fell 1.07 percent, Germany's DAX index shed 0.44 percent, and France's CAC-40 declined 0.28 percent.

Asian markets tumbled in the wake of Wall Street's losses on Thursday. Japan's Nikkei stock average closed down 2.09 percent, while Hong Kong's Hang Seng index fell 3.25 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Buying Life Insurance: What Kind and How Much?

2007-11-02T00:19:00.000+07:00

Finding the middle ground between being "insurance poor" and unprotected requires assessing real needs and choosing products that are affordable. This article introduces different types of insurance products and the role that they can play in a personal financial plan.
1.Buying Life Insurance

Conventional wisdom says that life insurance is sold, not purchased. In other words, some people are reluctant to discuss the importance of owning life insurance, and others are simply unaware of the need to have life insurance. Although many large companies provide life insurance as part of their benefits package, this coverage may be insufficient.

Who needs life insurance? If there are individuals who depend on you for financial support, or if you work at home providing your family with such services as child care, cooking, and cleaning, you need life insurance. Older couples also may need life insurance to protect a surviving spouse against the possibility of the couple's retirement savings being depleted by unexpected medical expenses. And individuals with substantial assets may need life insurance to help reduce the effects of estate taxes or to transfer wealth to future generations.
2.Types of Insurance

Term insurance is the most basic, and generally least expensive, form of life insurance for people under age 50. A term policy is written for a specific period of time, typically 1 to 10 years, and may be renewable at the end of each term. Also, the premiums increase at the end of each term and can become prohibitively expensive for older individuals. A level term policy locks in the annual premium for periods of up to 30 years.

Declining Balance Term insurance, a variation on this theme, is often used as mortgage insurance since it can be written to match the amortization of your mortgage principal. While the premium stays constant over the term, the face value steadily declines. Once the mortgage is paid off, the insurance is no longer needed and the policy expires. Unlike many other policies, term insurance has no cash value. In this sense, it is "pure" insurance without any investment options. Benefits are paid only if you die during the policy's term. After the term ends, your coverage expires unless you choose to renew the policy. When buying term insurance, you might look for a policy that is renewable up to age 70 and convertible to permanent insurance without a medical exam.

Whole Life combines permanent protection with a savings component. As long as you continue to pay the premiums, you are able to lock in coverage at a level premium rate. Part of that premium accrues as cash value. As the policy gains value, you may be able to borrow up to 90% of your policy's cash value tax-free.

Universal Life is similar to whole life with the added benefit of potentially higher earnings on the savings component. Universal life policies are also highly flexible in regard to premiums and face value. Premiums can be increased, decreased or deferred, and cash values can be withdrawn. You may also have the option to change face values. Universal life policies typically offer a guaranteed return on cash value, usually at least 4%. You'll receive an annual statement that details cash value, total protection, earnings, and fees.

Drawbacks to this type of insurance include higher fees and interest rate sensitivity. Universal policies include up-front fees as well as ongoing administrative fees totaling as high as 5% to 7% of your premiums. You may also find your premiums increasing when interest rates decline.

Variable Life generally offers fixed premiums and control over your policy's cash value. Your cash value is invested in your choice of stock, bond, or money market funding options. Cash values and death benefits can rise and fall based on the performance of your investment choices. Although death benefits usually have a floor, there is no guarantee on cash values. Fees for these policies may be higher than for universal life, and investment options can be volatile. On the plus side, capital gains and other investment earnings accrue tax deferred as long as the funds remain invested in the insurance contract.

Universal Variable Life insurance is the most aggressive type of policy. Like variable life, you control your investment in mutual funds. However, there are no guarantees on universal variable policies beyond the original face value death benefit. These policies are probably best suited to affluent buyers who can afford the risks involved.

Key Terms and Definitions

Face Value -- The original death benefit amount.
Convertibility -- Option to convert from one type of policy (term) to another (whole life), usually without a physical examination.
Cash Value -- The savings portion of a policy that can be borrowed against or cashed in.
Premiums -- Monthly, quarterly, or yearly payments required to maintain coverage.
Beneficiary -- The individual(s) or entity (e.g., trust) that is designated as benefit recipient.
Paid Up -- A policy requiring no further premium payments due to prepayment or earnings.
3.How Much Insurance Do I Need?
A popular approach to buying insurance is based on income replacement. In this approach, a formula of between five and ten times your annual salary is often used to calculate how much coverage you need. Another approach is to purchase insurance based on your individual needs and preferences. The first step is to determine your unique income replacement needs.
Currently, a large portion of your income goes to taxes (insurance benefits are generally income tax free) and to support your own lifestyle. Start off by determining your net earnings after taxes. Then add up all your personal expenses such as food, clothing, magazine subscriptions, club memberships, transportation expenses, etc. The remainder represents annual income that your insurance will need to replace. You'll want a death benefit amount which, when invested, will provide income annually to cover this amount. Then, you should add to that the amounts needed to fund one-time expenses such as college tuition for your children or paying down mortgage or debt.
Income replacement for nonworking spouses is an important and often overlooked insurance need. Coverage should provide for your costs for day care, housekeeping, or nursing care. Add to this any net earnings from part-time employment.
Finally, estimate your own "final expenses" such as estate taxes, uninsured medical costs, and funeral costs.
4 Other Types of Life Insurance
Survivorship life insurance (also referred to as last-to-die or second-to-die) is a unique type of contract that insures the lives of two people. It pays a death benefit upon the death of the second insured. Therefore, it is typically less expensive than two individual policies. Survivorship life is often used for estate planning, where it may be possible to potentially leverage today's dollars -- via insurance premiums -- into a potentially significant death benefit that can be used to fund estate taxes, create wealth for future generations, or benefit a charity. These policies may be available if one insured is medically "uninsurable."
First-to-die life insurance insures the life of at least two people and pays a benefit upon the death of the first insured. This policy is useful for covering a mortgage or other large debt obligation where there is more than one debtor. In addition, it can be an ideal tool for funding a buy-sell agreement within a closely held business.
5.Conclusion
Life insurance is an important component of a sound financial plan. Buying insurance involves asking a variety of personal lifestyle and financial questions. If you are not already working with an insurance professional, you may want to consider the advice of a fee-for-service financial planner who can offer you an objective review of your insurance options. When you decide on what you want, there are many solid insurance companies to choose from. Consult your library or an independent insurance professional for companies with the highest ratings from the four ratings agencies: AM Best, Duff Phelps, Standard & Poor's, and Moody's.

For Golden Years, Invest Abroad by John Christy

2007-11-02T00:18:00.000+07:00

How are you planning to spend your retirement? Sailing in the Greek isles? Learning to cook while living in a Tuscan villa? Perfecting your golf game in Scotland? Skiing in the Swiss Alps? Or maybe just lying on the beach in Bali?

If your dreams include these or any other exotic adventures, you can't afford to wait until retirement to start exploring the world. It's time to pack your bags now--at least as far as your portfolio is concerned.

When your grandparents started saving for retirement, international investing wasn't much of an option. Their choices--if any--were limited to a handful of international mutual funds and big global companies with shares trading in New York. And back then, brokers and other financial advisers didn't have decades of academic research to draw upon or fancy Powerpoint presentations to illustrate the case for going global.

International investing has come a long way in recent years. In 1985, there were fewer than 50 global mutual funds to choose from, with combined assets of about $8 billion, according to the Investment Company Institute. Now there are more than 800 funds, representing closer to $1 trillion.

Your grandfather's plain-vanilla global mutual fund has been replaced by a dizzying array of exchange-traded funds, American depositary receipts, closed-end funds and specialized regional or single-country mutual funds. Getting exposure to global markets from Stockholm to Shanghai is as easy as buying shares of IBM (nyse: IBM), and as time goes by even more offerings are sure to be on the way. Discount brokers such as E-Trade, for example, are already experimenting with ways to trade stocks listed on foreign exchanges directly from your laptop.

Trouble is, even though the current generation of investors is spoiled for choice when it comes to international markets, most folks still keep the vast majority of their money at home, just like Grandma and Grandpa did.

Sure, lots of Americans have dabbled in foreign stocks or funds, but how many have actually built truly global portfolios? It's hard to say, but based on some data that I've seen and tons of anecdotal evidence, my guess is very few. And during a market panic like the one we've seen this summer, I wouldn't be surprised to see more investors cutting back on international exposure, especially when it comes to "serious money" like 401(k) plans and other retirement accounts.

There are a few problems with this view. For starters, most Americans are already way too dependent on the U.S. economy. We own homes here and we work for companies that are based here. Before we invest a single dime of our savings, we are 100% exposed to the U.S. market. So if you only had 10% or 15% of your stock portfolio invested overseas before the subprime mess started to unfold and you start cutting back now, chances are you'll end up with almost negligible international exposure in a holistic sense.

So how much is enough? The answer will vary depending on your circumstances, but I think you need at least 20% in international stocks to even begin making a difference.

Consider the following example. Say your net worth is $1 million, half of which is a home (no mortgage) and the other half is an investment portfolio. And let's say the portfolio has 60% in stocks and 40% in bonds, cash and other investments.

That leaves you with $300,000 to put to work in stocks. If you're only investing 10% of that amount internationally, you're down to $30,000 to play with overseas. So you've really only diversified a mere 3% of your net worth outside the U.S.

Jeremy Siegel, a professor of finance at the Wharton School, argues that at least 40% of your stock portfolio should be allocated overseas. I think you can go as high as 50% if you're not planning to retire for another 20 years or more.

Sound too risky?

It's not as far-fetched as it may seem. The U.S. represents about half of the world's market capitalization, so by that measure, a 50% allocation overseas would be just about right. And it's hardly a new concept. European investors in Switzerland, the Netherlands and other smaller markets have long taken a global approach to investing. Try asking someone from Sweden or Belgium if they think global investing is "risky." Warning: They might look at you like you're from outer space.

Part of the problem is that somewhere along the line we learned to associate "foreign" with "risky." Sure, Nigerian small-cap stocks might not be the best place to park your 401(k). But you can also lose your shirt investing in shares of a penny stock that's located in your hometown. The real risk is keeping too much of your money at home.

Don't get me wrong. I'm not one of those gloom and doom conspiracy theorists who think America is about to go the way of the Roman Empire. But when I look overseas, I see too many opportunities to ignore.

International stocks have performed well in recent years, but they still offer one of the best combinations of value and growth that you can find in any asset class. U.S. stocks are trading at 16 times 2007 estimated earnings, with expected earnings growth in the 7% neighborhood. Compare this with emerging markets, where stocks trade for about 14 times earnings and offer 15% growth. Even stodgy old Europe is on course to deliver better earnings growth than the U.S.--and it's cheaper too, at 14 times earnings.

Planning for retirement involves making a lot of assumptions about the future. It's tough enough predicting what the economy and markets will do next quarter, let alone several decades from now.

But there's one thing I can almost guarantee. The forces of globalization will continue to boost the importance of international markets, particularly emerging economic powers like China and India. Now is the time to make sure your retirement portfolio has a meaningful stake in these markets of the future.

Market Update

2007-11-02T00:15:00.000+07:00

12:55 pm : The major indices continue to trade in negative territory, with the Dow slightly trailing the broader market.

Only five of the 30 components in the Dow Jones Industrial Average are currently showing gains, with Microsoft (MSFT 37.29, +0.48) providing leadership. Financial stocks are the largest drags on the Dow. Citigroup (C 38.70, -2.66), AIG (AIG 60.39, -2.73) and JPMorgan (JPM 45.06, -1.94) are the main laggards.DJ30 -206.55 NASDAQ -35.50 SP500 -22.12 NASDAQ Dec/Adv/Vol 1.27 bln/2298/625 NYSE Dec/Adv/Vol 2596/547/786 mln

12:30 pm : Since the last update, the stock markets recovered some losses, but the gains are modest compared to this session's range. The energy sector (+0.02%) has had a notable turnaround as it follows crude oil's recovery.

Crude has pared a good portion of its intraday losses, and is now down 0.4% to $94.12. On Sept. 11th, OPEC decided to increase production by 500,000 barrels a day, which officially took effect today. DJ30 -183.39 NASDAQ -31.55 SP500 -19.66 NASDAQ Dec/Adv/Vol 2280/615/1.15 bln NYSE Dec/Adv/Vol 2619/498/703 mln

12:00 pm : Following yesterday's Fed induced rally, the stock market opened with substantial losses, and has remained in the red throughout the session. The main catalysts for the profit taking have been Dow components Citigroup (C 38.60, -2.76) and Exxon Mobil (XOM 89.90, -2.09).

CIBC downgraded Citigroup to Sector Perform from Sector Outperform this morning. The downgrade, though, isn't the focal point for investors so much as the thesis behind the ratings change.

CIBC analyst Meredith Whitney believes that Citigroup will need to raise more than $30 billion in capital over the near-term through either asset sales, a dividend cut, a capital raise, or a combination thereof. Whitney adds that Citigroup's tangible capital ratio stands at just 2.8 percent versus an average of 5.0 percent for its peers.

Meanwhile, Exxon Mobil , the largest company in the world by market cap, reported its biggest drop in quarterly profits in more than three years. The company reported net income of $9.41 billion or $1.70 per share - four cents below estimates.

Economic data were slightly negative this morning. The core PCE deflator for September and the weekly initial jobless claims were in-line with expectations. The ISM Index , however, came up short of economists' forecasts.

All ten economic sectors are in the red. Some of the most influential sectors are underperforming which is acting as a major drag on the broader market. The financial (-3.7%), energy (-1.7%) and consumer discretionary (-1.8%), which combined make up roughly 41 percent of the S&P 500, are laggards.

The tech, healthcare and utilities sectors are outperforming on a relative basis, but are still posting losses around 0.7%

Crude oil hit an all-time high of $96.24 in electronic trading, but has since retreated and is now down 1.3% to $93.33. DJ30 -220.00 NASDAQ -36.65 SP500 -24.73 NASDAQ Dec/Adv/Vol 2282/568/999 mln NYSE Dec/Adv/Vol 2600/500/607 mln

11:30 am : The stock market has headed mostly sideways in the past half hour.

Shares of shoemaker Crocs (CROX 53.50. -21.40) are getting clipped. The company reported earnings that beat expectations by $0.03 per share, but missed on the top line and gave just in-line FY07 guidance. Investors are disappointed that Crocs did not beat by more, as it has in the past.DJ30 -182.09 NASDAQ -29.24 SP500 -20.65 NYSE Adv 449

11:00 am : The major indices are off their lows after making modest gains. Losses are still substantial, though.

At the NYSE, the overwhelming majority of stocks are currently in the red. The advancers to decliners ratio is a mere 0.13. Meanwhile, volume is heavier than it has been the past few days.

The small-cap Russell 2000 Index is underperforming the broader market.DJ30 -189.89 NASDAQ -30.0 R2K -2.2% SP500 -21.37 NASDAQ Dec/Adv/Vol 2224/528/683 mln NYSE Dec/Adv/Vol 2637/378/409 mln

10:30 am : Buyers are not showing much interest as the stock market extends its losses following a disappointing economic report.

Released at the bottom of the hour, the October ISM Index, a survey of national manufacturing activity, dropped to 50.9, from a prior reading of 52.0. The number was also lower than consensus estimate of 51.5. A number above 50 is intended to indicate growth.

Conversely, the bond market has had a pickup in buying interest as stocks slide.DJ30 -217.37 NASDAQ -35.22 SP500 -25.43 NASDAQ Dec/Adv/Vol 2249/429/464 mln NYSE Dec/Adv/Vol 2537/356/185 mln

10:00 am : The Dow and S&P have given up all of yesterday's gains and then some as the stock market has had a substantial decline in the early-going. All of the major indices are in the red due to broad-based selling pressure. The financial sector (-3.3%) is the main drag as Citigroup's (C 38.43, -2.95) stock plummets.

Although third quarter GDP was strong, economic growth will slow in the fourth quarter. The earnings outlook is mediocre. So, it is understandable that the market will sell-off some today after yesterday's big rally. Of course, that is not to say a recovery is not possible today.

Meanwhile, crude oil is now down 2.0% to $92.73 after hitting an all-time high of $96.24 in electronic trading.DJ30 -191.43 NASDAQ -31.15 SP500 -21.75 NASDAQ Dec/Adv/Vol 2077/410/199 mln NYSE Dec/Adv/Vol 1722/270/58 mln

09:40 am : The stock market opened decidedly lower. Yesterday, the stock market rallied following the FOMC decision to cut policy rates by 25 basis points.

There are a few profit taking catalysts this morning. A CIBC analyst downgraded Citigroup (C) and asserted that the company may be forced to cut its dividend or sell off assets to meet a $30 billion capital shortfall.

A report from RealtyTrac that U.S. foreclosure activity increased 30 percent in the third quarter from the previous quarter and nearly doubled from the year-ago period.

Earnings reports were mixed today. Dow component Exxon Mobil (XOM), which has the largest market cap in the world, is a drag on the market after the company reported worse than expected third quarter earnings.

Core PCE Inflation and weekly initial jobless claims were in-line with expectations. DJ30 -181.92 NASDAQ -36.74 SP500 -22.61

09:16 am : S&P futures vs fair value: -16.3. Nasdaq futures vs fair value: -17.3.

09:00 am : S&P futures vs fair value: -18.8. Nasdaq futures vs fair value: -20.3. Additional profit taking has pushed the futures market lower. Oil is now flat at $94.58 a barrel.

08:33 am : S&P futures vs fair value: -10.0. Nasdaq futures vs fair value: -9.5. Futures dipped following a worse than expected earnings report from Dow component Exxon Mobil (XOM). At 8:30 ET, futures then made a slight recovery immediately following the Core PCE Inflation reading of 0.2% and the weekly initial jobless claims reading of 327k. Economists were expected the Core PCE Inflation to be 0.2% and the weekly initial jobless claims to be 330K.

08:01 am : S&P futures vs fair value: -8.3. Nasdaq futures vs fair value: -6.5. Futures are pointing to a lower open, but losses are modest compared to yesterday’s rally following the 25 basis point rate cuts. Profit taking catalysts include rising oil prices, a CIBC assertion that the Citigroup (C) has a $30 billion capital shortfall, and a report from RealtyTrac that U.S. foreclosures increased in the third quarter by 30%. The majority of today’s earnings reports have beat estimates.

06:21 am : S&P futures vs fair value: -6.7. Nasdaq futures vs fair value: -5.5.

06:20 am : FTSE...6681.00...-40.60...-0.6%. DAX...7995.98...-23.14...-0.3%.

06:20 am : Nikkei...16870.40...+132.77...+0.8%. Hang Seng...31492.88...+140.30...+0.5%.

Stock Investors Fear End to Rate Cuts

2007-11-02T00:14:00.000+07:00

NEW YORK (AP) -- Wall Street plunged Thursday as investors found themselves confronted by two uncomfortable prospects: an end to interest rate cuts and a slowing economy. The Dow Jones industrials skidded more than 180 points.Mindful of a warning from the Federal Reserve Wednesday about inflation, the market nervously watched the price of oil, which passed $96 a barrel overnight for the first time before dipping on profit-taking. The Fed, which cut interest rates a quarter point, said in a statement that inflation remained a concern, and oil's ascent to another record raised the possibility not only that the Fed might stop cutting rates, but that it might even consider raising them if inflation accelerates.

Meanwhile, Wall Street had to contend with concerns about a slowing economy. A report from the Commerce Department indicated consumers scaled back their spending in September as worries mounted about a worsening housing market and further credit market turmoil. And a trade group reported that manufacturing in the U.S. grew in October at the weakest pace since March.

The confluence of factors led investors to pull back sharply from Wednesday's rally, in which the Dow climbed 137 points after the Fed said the economy had weathered the summer's credit crisis.

"Wall Street is in love with the idea of a rate cut, and realized that the Fed said inflation is still a concern -- that lowered the chances of a cut in December," said Ryan Detrick, a senior technical strategist with Schaeffer's Investment Research. "We're now feeling the pain now that investors have slept on it, and figured out what they said."

Christopher Cordaro, chief investment officer at RegentAtlantic Capital, said Wall Street remains anxious about the possibility of receission. He also believes the market is devoid of enough positive news "to have any type of sustained rally."

Investors were unswayed when the Fed pumped $41 billion into the U.S. financial system, one of its largest cash infusions since the credit crisis began in the summer. This increases the amount of money banks have to lend, and helps improve liquidity. In the past, such an action helped soothe the market, but that was not the case Thursday.

With the market growing pessimistic about the economy, the Labor Department's report on October jobs creation, scheduled to be released Friday morning, will be taking on even more importance than it usually has on Wall Street.

The Dow fell 180.87, or 1.30 percent, to 13,749.14 after being down more than 200 points earlier.

The Standard & Poor's 500 index was off 18.83, or 1.22 percent, at 1,520.55, while the Nasdaq composite index dropped 30.57, or 1.07 percent, to 2,828.55.

Investors pulling money out of stocks turned to the safe haven of the Treasury market. The yield on the 10-year Treasury note fell to 4.38 percent from 4.47 percent late Wednesday.

Crude prices pulled back after surpassing $96 per barrel in overnight trading. A barrel of light sweet crude fell $1.04 to $93.48 on the New York Mercantile Exchange.

The Commerce Department's report that consumer spending rose by 0.3 percent in September, slightly lower than the 0.4 percent increase that analysts expected, raised concerns about a slowing economy.

In addition, the performance of the manufacturing sector in October suggested that ongoing troubles in the housing and credit markets have seeped into the industrial sector. The Institute for Supply Management, a Tempe, Ariz.-based trade group, reported its manufacturing index registered 50.9, down from 52.0 in September and below expectations for 51.8. A reading above 50 indicates growth; below that spells contraction.

Also Thursday, the Labor Department said the number of people filing for unemployment benefits declined by a larger-than-expected 6,000 last week to total 327,000.

Wall Street was also troubled by the day's corporate news. Exxon Mobil Corp.'s third-quarter profits fell 10 percent because of lower refining and chemical margins. Shares of the Dow component dropped $2.01, or 2.2 percent to $89.98.

Citigroup Inc. and Bank of America Corp., the two biggest U.S. banks, were downgraded by CIBC World Markets on worries about the credit markets. Bank of America, the nation's second-largest bank, dropped $1.78, or 3.7 percent, to $46.50. Citi, the nation's largest financial institution, dropped $2.68, or 6.4 percent to $38.68 -- its lowest level in four years.

Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to 602.5 million shares.

The Russell 2000 index of smaller companies was down 20.68, or 2.50 percent, at 807.34.

The plunge in U.S. stocks caused European bourses to tumble. In afternoon trading, Britain's FTSE 100 was down 2.17 percent, Germany's DAX index fell 1.77 percent, and France's CAC-40 dropped 2.09 percent. Japan's Nikkei stock average, which closed before U.S. markets opened, rose 0.79 percent.

Dollar Mired Near Fresh Lows by Korman Tam

2007-10-31T22:45:00.000+07:00

The greenback remains under pressure as traders position ahead of this week’s closely anticipated FOMC monetary policy setting meeting. Fed funds futures are fully pricing in a 25-basis point rate cut to 4.50%, thereby dragging the dollar to fresh record lows against the euro at 1.4437 and a new multi-decade lows versus the Loonie at 0.9576 and Aussie at 0.9270.

Although the Fed is largely expected to ease by 25-bp, the dollar’s direction will likely be dictated by the accompanying FOMC policy statement and whether further easing can be anticipated. We look for the Fed to maintain a largely neutral stance in its policy statement, with an emphasis on the preemptive nature of the cut “to forestall some of the adverse effects on the broader economy”, as stated last month.

Several key pieces of US economic data are slated for release this week including Q3 GDP, Chicago PMI, September PCE, October manufacturing ISM, September durable goods orders, factory orders and the October labor report. Economic growth in the third quarter is estimated to slip to 3.0%, down from 3.8% previously. Meanwhile, October non-farm payrolls are expected to slip to 80.0k, versus 110.0k from September. The unemployment rate is seen unchanged at 4.7%. Nevertheless, garnering the lion’s share of market attention will be the Fed’s two-day policy setting meeting and accompanying statement scheduled for Wednesday at 2:15 PM.Euro Climbs to New All-Time High

The single currency rallied to a fresh high against the dollar at 1.4437 and recovered further versus the yen toward 165.47. Economic data released from the Eurozone overnight saw Germany’s preliminary CPI and HICP. The October CPI in the Eurozone’s largest economy edged up 0.2% m/m and 2.4% on an annualized basis, versus expectations for an increase of 0.1% m/m and 2.4% y/y. The October preliminary HICP was in line with forecasts, up 0.2% m/m and 2.7% y/y.

EURUSD continues to hold steady above the 1.44-level, with resistance emerging at 1.4440 and 1.4470. Subsequent ceilings are seen at 1.45 and 1.4550. On the downside, support begins at 1.44, followed by 1.4380 and 1.4350. Additional floors are eyed at 1.43, backed by 1.4250 and 1.4220.

USD Slumps on Consumer Confidence by Korman Tam

2007-10-31T22:43:00.000+07:00

The beleaguered dollar found no reprieve on Tuesday, remaining mired near all-time lows versus the euro at 1.4436, and 26-year lows against the sterling just shy of the 2.07-level. Dragging the greenback lower today was a report from the Conference Board revealing a dip in consumer confidence to a new 2-year low at 95.6 for October, compared with a downwardly revised 99.5 from September. The expectations index for October fell to 80.1, versus a revised 85.0 from a month earlier.

The currency market will likely consolidate in the coming session as traders take to the sidelines ahead of Wednesday’s FOMC monetary policy decision and accompanying statement. Although the Fed funds futures are fully discounting a 25-basis point rate cut to 4.50% tomorrow, the focus will be on the language used in the subsequent policy statement. Further, the dollar may regain its footing against the majors if the Fed instead opts to leave rates unchanged at 4.75% while signaling a cut at its December meeting.

Prior to the Fed announcement, several key pieces of economic data will provide additional gauges on the state of the US economy. Growth in Q3 is estimated to fall to 3.0%, down from 3.8%. The core PCE is seen edging up to 1.5% from 1.4%, while the headline Q3 PCE is forecasted to fall to 1.5% from 4.3%. The October ADP private sector payrolls, often viewed as a proxy to the more important non-farm payrolls, are seen up slightly to 60k versus 58k. Meanwhile, the October Chicago PMI is estimated to slip to 53.0, down from 54.2.GBP Rallies amid Tempered Rate Cut Expectations

The sterling climbed to its highest level in 26-years against the greenback while rallying sharply versus the yen prompted by overnight comments from a Bank of England board member. The BoE’s Barker pondered whether conditions have changed significantly since August that would force the Bank’s hand next week. Given the recent slate of upbeat UK economic reports, we do not expect the BoE to alter its stance when it deliberates monetary policy next week.

Cable remains buoyed near its multi-decade highs, pulling off slightly from beneath the 2.07-level. Resistance is seen at 2.07, followed by 2.0740 and 2.0775. Subsequent ceilings are eyed at 2.08 and 2.0850. Meanwhile, on the downside support begins at 2.0650, followed by 2.06 and 2.0560. Additional floors will emerge at 2.0530 and 2.05.Euro Hovers near All-Time High

The euro remains buoyed near its record high versus the dollar near the 1.4440-level. Germany’s October unemployment rate was unchanged at 8.7%, while the unemployment change was -40k, versus -30k from September. In the Wednesday session, traders will digest Germany September retail sales, Eurozone October business climate, consumer sentiment, industrial sentiment, unemployment rate and flash inflation.

EURUSD continues to hold steady above the 1.44-level, with resistance emerging at 1.4440 and 1.4470. Subsequent ceilings are seen at 1.45 and 1.4550. On the downside, support begins at 1.44, followed by 1.4380 and 1.4350. Additional floors are eyed at 1.43, backed by 1.4250 and 1.4220.

Fed Rate Cut Expected Wednesday By Martin Crutsinger, AP Economics Writer

2007-10-31T22:41:00.000+07:00

WASHINGTON (AP) -- With oil prices soaring and the housing market sinking, the Federal Reserve is likely to combat the economic turmoil with more interest rate cuts.

Federal Reserve Chairman Ben Bernanke and his colleagues were wrapping up a two-day meeting Wednesday and many economists believe they will announce that they have decided to follow September's half-point cut in the federal funds rate with a quarter-point cut at this meeting."They are going to cut rates," predicted Mark Zandi, chief economist at Moody's Economy.com. "The economy is weakening and financial markets remain unsettled."

Many analysts said this rate reduction probably will not be the last either, as the central bank keeps reducing rates to help the economy overcome a host of problems.

The Fed cut the federal funds rate, the interest that banks charge each other, for the first time in four years at its September meeting, reducing it to 4.75 percent. Responding to that move, commercial banks cut their prime lending rate, the benchmark for millions of consumer and business loans, by a half-point as well to 7.75 percent.

The economy's troubles include the worst slump in housing in more than two decades and a credit crunch that roiled financial markets this summer when investors suddenly became concerned about mounting losses from defaults on subprime mortgages.

With lenders tightening mortgage standards, marking it harder for prospective buyers to qualify for loans, and defaults continuing to rise, the slump in housing has deepened.

Financial markets also have a new worry in the latest surge in oil prices. Crude oil prices have hit records above $93 per barrel.

The worry is that the combination of the deep slump in housing, a lingering credit-crunch and rising oil prices will severely dampen consumer spending, the economy's main growth engine, in the months ahead.

"The economy is facing a perfect storm right now of a crisis-related tightening of credit, higher oil prices and lower house prices," said David Jones, chief economist at DMJ Advisors, a Denver forecasting firm. "We are going to see a significant slowing in growth."

Jones forecast that the overall economy, as measured by the gross domestic product, will slow to a rate of 1.5 percent for this quarter and will dip even lower to a rate of 1.3 percent in the first three months of next year.

That sluggish pace would make the economy vulnerable to some type of economic shock that could push GDP growth into the negative territory that signals a recession.

"The consumer is getting squeezed right now between falling home prices and rising oil prices," said David Wyss, chief economist at Standard & Poor's in New York. "They have got to slow down. It is just a question of how much and how fast."

In two worrisome developments, the Conference Board's consumer confidence index fell for a third consecutive month in October, dropping to the lowest level in two years, while the S&P/Case-Shiller Index of home prices, based on 20 cities around the country, dropped by a record 5 percent in August.

Still, the economy showed strength in reports released before the Fed meeting Wednesday. In the third quarter, gross domestic product grew at a brisk 3.9 percent pace, faster than economists had expected, the Commerce Department reported Wednesday.

A second report showed construction spending rose 0.3 percent in September, the best showing in four months, with commercial and private building more than offsetting the weak home market.

But the ongoing credit and housing problems and the renewed surge of energy prices are expected to exact a toll in upcoming months with the economy not expected to regain its balance until mid-2008. Many analysts believe that in addition to a rate cut Wednesday, the Fed will cut rates at its final meeting of the year in December and possibly at its January meeting as well.

Lyle Gramley, a former Fed board member and now an economist with Stanford Financial Group, put the chances of a recession at around 40 percent, saying the Fed's primary concern right now is what is happening in housing and how much of a spillover that will have on the overall economy.

"It is possible that the housing industry will take us over the edge into a recession," he said, noting that every housing downturn of the past 60 years with the exception of two have triggered recessions.

Federal Reserve: http://www.federalreserve.gov

Google Stock Barrels Through $700 By Michael Liedtke, AP Business Writer

2007-10-31T22:40:00.000+07:00

SAN FRANCISCO (AP) -- Google Inc.'s stock price barreled through $700 for the first time Wednesday, propelled by a belief that the Internet search leader will become even more profitable as it plants its products and services in new markets.The Mountain View-based company's shares traded as high as $704.79 in morning trading before falling back to $703.87, up $9.10 for the session. It took less than a month for the stock to leap from $600 to $700, building upon a fervor that has lifted Google's market value by more than 30 percent since mid-September.

During that 6 1/2-week stretch, Google has created an additional $53 billion in shareholder wealth. That dwarves the total $41 billion market value of another Internet icon, Yahoo Inc., which had a 4-year head start on Google.

The latest surge came after Google confirmed plans to become a bigger force in the Internet's social networking scene and amid reports that the company is about to unveil a long-rumored operating system designed for mobile phones so it can make more money by distributing ads to people on the go.

The recent rally has firmly established Google as Silicon Valley's most valuable publicly held company, supplanting Internet networking supplier Cisco Systems Inc. With a market value of nearly $220 billion, Google also is now worth more than Warren Buffett's holding company, Berkshire Hathaway Inc., whose steadfast refusal to split its stock during the past four decades has left its shares at nearly $130,000.

Google co-founders Larry Page and Sergey Brin, who regard Buffett as an inspiration, so far have resisted requested requests to split their company's stock so more people could afford to buy a few shares. Their theory: a high stock price tends to attract more patient and knowledgeable investors who pay closer attention to a company's long-term strategy than its ability to hit short-term earnings targets.

The philosophy has generated impressive returns so far. A $10,000 investment in Google stock's at its August 2004 initial public offering price of $85 would now be worth about $82,000.

Brin and Page, both 34, have been the biggest winners by far, with estimated fortunes exceeding $20 billion apiece. At least two other Google executives, Chairman Eric Schmidt and sales chief Omid Kordestani, are billionaires while hundreds of other employees have become millionaires because of their stock holdings in the 9-year-old company.

Wall Street is betting Google is still in its financial infancy, even though it's already on track for a profit of about $5 billion this year on more than $15 billion in revenue.

The company has made virtually all of its money so far by displaying text-based advertising links alongside search results and other Web content that includes topics related to the commercial message.

During the past year, Google has introduced new online advertising channels featuring video, graphics and other more compelling features while also extending its marketing machine into television, radio and print.

Now, Google appears intent on shaking up the telecommunications industry by introducing inexpensive cell phones that will make it easier for people on the go to use Google's search engine, maps, e-mail and other applications.

If it pans out, the new Google phone presumably will give the company a chance to sell more mobile advertising and further boost its profits.

Economy Logs Brisk 3.9 Percent Growth By Jeannine Aversa, AP Economics Writer

2007-10-31T22:38:00.000+07:00

WASHINGTON (AP) -- The economy picked up speed in the summer, growing at a brisk 3.9 percent pace, the fastest in 1 1/2 years and an impressive performance even as a credit crunch plunged the housing market deeper into turmoil.The latest snapshot of the country's economic health, released by the Commerce Department on Wednesday, suggested that the economy is demonstrating much resilience and thus far holding up well to the strains in the housing and credit markets, which had intensified during the third quarter and rocked Wall Street.

A second report from the department showed construction spending rose 0.3 percent in September, the best showing in four months. All-time high spending in both commercial construction by private builders and government projects more than offset weakness in home building.

For the entire July-to-September quarter, individuals ratcheted up their spending. U.S. businesses sold more goods abroad and boosted some investment at home. Those were main factors helping to push up overall economic activity during that period.

The third quarter's growth rate was up slightly from a 3.8 percent pace logged in the second quarter. It marked the strongest showing since the first quarter of last year.

The increase in gross domestic product exceeded analysts' forecasts for a 3.1 percent growth rate for third quarter. Gross domestic product is the value of all goods and services produced within the United States and is considered the best barometer of the country's economic fitness.

The White House was pleased that problems in housing didn't spread widely through other parts of the economy during the summer as some feared. "This is an extremely resilient economy," said Ed Lazear, chairman of President Bush's Council of Economic Advisers. "It is really quite remarkable."

Builders slashed investment in housing projects by 20.1 percent, on an annualized basis, in the third quarter, the largest drop in a year. That was even deeper than the 11.8 percent annualized cut made in the second quarter and provided stark evidence of the darkening housing picture.

"This may have been the summer of the housing market's discontent but it clearly wasn't for the rest of the economy," said Joel Naroff of Naroff Economic Advisors.

The new figures on the economy come as the Federal Reserve meets for a second day Wednesday to weigh whether it needs to lower a key interest rate to protect the economy down the road from the ill effects of the ailing housing market. Wall Street investors are betting on a smaller, one-quarter percentage point cut. That would follow up on a bolder half-percentage point reduction ordered in September, the first rate cut in more than four years.

Stocks were up in trading before the Fed's decision. The Dow Jones industrials were up 42 points.

The ill effects of the housing slump and credit crunch didn't deter consumers in the summer.

Consumers, whose spending is an important ingredient for the economy's good health, actually rediscovered their appetite to spend in the third quarter. Their spending rose at a 3 percent pace, a considerable improvement from the second quarter's rather weak 1.4 percent growth rate.

One of the reasons why people are continuing to spend is because the nation's employment climate has managed to stay fairly sturdy through all the problems. Wage and job gains have served as shock absorbers for some of the negative forces of the housing slump, weaker home prices and more restrictive credit.

Another report from the Labor Department showed employers' costs to hire and retain workers rose 0.8 percent in the July-to-September quarter. That was down a bit from a 0.9 percent increase posted in the second quarter, but still suggested workers are seeing solid compensation gains.

Businesses, meanwhile, increased their spending on equipment and software at a 5.9 percent pace in the third quarter, up from a 4.7 percent growth rate in the prior period. They also boosted their investment in inventories, another factor that added to GDP.

Strong sales of U.S. exports to foreign buyers was another big factor in the good third-quarter showing. Exports of goods and services grew by 16.2 percent, on an annualized basis, during the quarter. That was the biggest increase since the final quarter of 2003.

Business investment in commercial structures, such as office buildings and factories, grew at a 12.3 percent pace in the third quarter, a good showing but down from a sizzling 26.2 percent growth rate in the second quarter.

Government spending also contributed to third quarter GDP growth. Such spending rose at a rate of 3.7 percent, following a 4.1 percent pace in the second quarter.

As the economy picked up a bit of speed, so did inflation, although the rise wasn't seen as worrisome.

An inflation gauge closely watched by the Federal Reserve showed "core" prices -- excluding food and energy -- rose at a rate of 1.8 percent in the third quarter. That was up from a 1.4 percent pace in the second quarter, but it was within the Fed's "comfort zone."

Still, skyrocketing oil prices, which have reached record highs in recent days, could push up inflation and put a chill on consumer spending.

The meltdown in the mortgage market has made it harder for people to obtain financing to buy homes. That's aggravating problems in the housing market and leading to a mounting pileup of unsold homes. The housing slump is expected to drag on well into next year.

Against that backdrop, the Fed's overriding worry is that problems in housing and harder-to-get credit could seriously crimp spending and investing, dealing a dangerous blow to the national economy. Growth in the current October-to-December quarter is expected to slow to a pace of around 2 percent or less.

Merrill Lynch CEO O'Neal Out By Joe Bel Bruno, AP Business Writer

2007-10-31T13:26:00.000+07:00

NEW YORK (AP) -- The unfolding credit crisis has claimed its biggest corporate casualty so far: Merrill Lynch CEO Stan O'Neal.The announcement of his departure Tuesday came after the world's largest brokerage posted a $2.24 billion quarterly loss, its biggest since being founded 93 years ago. Merrill Lynch did not name a replacement for O'Neal, whose ouster had been expected, and who leaves the company with benefits worth $161.5 million.Laurence Fink, the chief executive of investment manager BlackRock Inc., turned down an initial overture from Merrill's board but is in active negotiations, according to a person with direct knowledge of the offer who was not authorized to speak publicly. With the presumed front-runner out of contention, filling the top spot at Merrill Lynch is not expected to be easy given the remaining unknowns from the global credit crisis.

Any replacement will face the daunting task of cleaning up investments in subprime mortgages and other risky types of debt, and rebuilding an investment house badly bruised.

There is speculation by a number of analysts that Merrill Lynch faces a $4 billion writedown during the fourth quarter. This would be on top of a $7.9 billion charge taken last quarter, a stunning amount since Merrill originally said it would write down only $4.5 billion because of credit market turmoil.

O'Neal was also criticized for reportedly approaching Wachovia Corp. about some kind of merger without the approval of his board.

"These losses, coupled with rumors that O'Neal had proposed a merger with Wachovia without the board's approval, essentially dug O'Neal's grave," said Morningstar analyst Ryan Lentell. "The new CEO's first priority must be to ensure proper risk-management procedures are in place to prevent a recurrence of the quarter's loss."

O'Neal, 56, accepted blame for the losses, which immediately led to calls for his ouster. The mistake would prove to be his last, ending a career that spanned more than two decades at Merrill.

He was one of the highest-ranking blacks on Wall Street -- a stunning climb from his impoverished roots in Alabama as the grandson of a former slave.

O'Neal emphasized riskier bets than past Merrill CEOs, rather than the safety of just selling stocks. That strategy -- which handed Merrill Lynch record results during the market's peak -- came with a heavy cost during the tumultuous third quarter.

Merrill Lynch still has sizable portfolio of complex financial instruments called collateralized debt obligations, which combine slices of different kinds of risk. It was Merrill's bet on CDOs, and the subprime mortgages underpinning many of them, that proved to be O'Neal's downfall.

Dealing with that portfolio will be the priority for co-presidents and chief operating officers Ahmass Fakahany and Gregory Fleming. Merrill Lynch said their duties will be split -- with Fleming in charge of Merrill's front-line businesses, such as its brokerage.

Fakahany, a close confidant of O'Neal, will lead back-office functions such as finance and human resources. Robert McCann, the president of the company's wealth management group, was not named in the power-sharing agreement.

Both McCann and Fleming were tipped as potential CEO candidates. Among those who had been said to be considered outside the firm were BlackRock's Fink and NYSE Euronext CEO John Thain. O'Neal resigned his board seat at BlackRock, in which Merrill owns a 49 percent stake.

A spokesman for Thain declined to comment.

Merrill's board is expected to tap someone that can boost morale among its 16,000 brokers. Many of them felt uncomfortable with O'Neal given Merrill's history of having CEOs with trading experience.

Merrill Lynch shares fell $2.42, or 3.6 percent, to $65. The price of buying protection against a default on Merrill Lynch bonds also increased after the news of O'Neal's departure, according to Phoenix Partners Group.

AP Business Writers Ellen Simon, Rachel Beck and Leslie Wines contributed to this report from New York.

Rate Cut Unlikely to Fix Housing Woes By Alan Zibel, AP Business Writer

2007-10-31T13:25:00.000+07:00

WASHINGTON (AP) -- The interest rate cut that Wall Street believes will buffer the economy from housing market woes is unlikely to give much of a boost to suffering banks and homebuilders in the near term, analysts say.The Federal Reserve policymaking committee is expected to approve cutting a key short-term rate at least a quarter percentage point Wednesday to help the economy get through a deeper-than-expected housing slump and credit crunch that accelerated in August.

Investors are betting the central bank will reduce the federal funds rate, the rate banks charge each other for overnight loans, to 4.5 percent. Over the next 12 to 18 months, lower short-term rates will aid the overall economy because many equity credit lines and some credit card rates are pegged to short-term market rates.

Yet the Fed's efforts now, on top of a half-percentage-point rate cut in September, won't change the outlook much, if at all, for companies on the front lines of surging mortgage defaults and a dried-up market for complex securities backed by home loans.

"The problems in the housing market, the problems in the credit markets are not easily solved by the Fed cutting rates," said Steve East, chief economist for investment bank Friedman Billings, Ramsey & Co. in Arlington, Va., who sees the Fed making three quarter-point cuts by January and puts the odds of a recession in 2008 at 60 percent.

The thinking is that lenders can improve battered balance sheets if they have to pay less for money they borrow short-term while the rate they charge borrowers for long-term loans holds steady or moves higher. Yet analysts say problems in the credit markets extend beyond the benefits of small rate cuts.

Struggling homebuilders, such as D.R. Horton Inc., Lennar Corp. and Pulte Homes Inc., are faced with tightened lending standards and severely limited demand. Many would-be buyers are unable to qualify for loan approvals, even if rates move lower.

Lower interest rates are "certainly not the panacea" for getting the housing market back on track, said UBS homebuilding analyst David Goldberg.

The median U.S. home price nationwide fell for the eighth consecutive month in August, according to the S&P/Case-Shiller index released Tuesday. Fifteen of 20 metropolitan areas included in the index declined. Many experts predict housing prices will fall further before demand rebounds.

Jefferson Harralson, a banking analyst with Keefe, Bruyette & Woods Inc. who follows banks such as Bank of America Corp. and Wachovia Corp., said an acceleration in losses from defaults "seems to be a given, whether or not a rate cut occurs."

He says home equity lines of credit will be less likely to default if rates are lower. But that's hardly a revenue cure for banks in an environment in which housing prices continue to fall and foreclosures continue to rise.

"The home equity business isn't going to be a growth business," Harralson said.

Stocks Slide Ahead of Fed Rate Decision By Madlen Read, AP Business Writer

2007-10-31T13:22:00.000+07:00

EW YORK (AP) -- Wall Street pulled back Tuesday as investors, uneasy about a drop in consumer confidence, traded cautiously ahead of the Federal Reserve's impending decision on interest rates.

After the Fed's half-point reduction in September, most investors expect the central bank to deliver a quarter-point cut at the conclusion of its two-day meeting on Wednesday.But inflation remains a threat. Crude oil prices fell Tuesday, but only after hitting a record a day earlier, and meanwhile, the dollar has been tumbling. So a rate cut -- much less additional decreases in the coming months -- is not a given.

Some on Wall Street fear economic growth could halt if rates aren't lowered, given the troubles in housing and credit. The statement the Fed issues alongside its rate decision will be closely read for clues about future moves.

"We don't think the economy's about to slip into recession. The corporate portion of the economy is still in pretty good shape," said Phil Orlando, chief equity market strategist at Federated Investors. "However, should the Fed choose not to cut anymore, and the economy continue to slip, that potentially could raise some concerns for us."

Most earnings have been coming in better than expected over the past few weeks, particularly in the technology sector. But consumers, the key drivers of the economy, appear to be flagging.

Following last week's news of a significant decline in existing home sales and Standard & Poor's report Tuesday of home prices sinking further, the Conference Board said its index of consumer confidence fell to its lowest level in two years in October. The index came in at 95.6, below the consensus estimate of 99.5 and down from a revised reading of 99.5 in September.

The Dow Jones industrial average fell 77.79, or 0.56 percent, to 13,792.47.

Broader stock indicators were mixed. The S&P 500 index fell 9.96, or 0.65 percent, to 1,531.02, while the Nasdaq composite index fell 0.73, or 0.03 percent, to 2,816.71.

Treasury bond prices were little changed ahead of the Fed decision. The yield on the 10-year Treasury note, which moves inversely to its price, was at 4.38 percent, flat with late Monday.

The market remains nervous that even if the Fed decreases the target fed funds rate by a quarter-point or half-point, the move may not end up helping the credit and housing markets. It's not the price of borrowing that's deterring investors, many say; demand has waned because of worries about the quality of the underlying assets.

Furthermore, the central bank must walk a narrow line between keeping investors calm and acknowledging the problems out there -- particularly for the banks and brokerages that could see more big losses if portions of the credit market, like asset-backed commercial paper, don't improve.

"Providing the superficial image of stability when everybody realizes things aren't normal just doesn't work," said Axel Merk, manager of the Merk Hard Currency Fund.

In addition to this week's Fed decision, Wall Street faces important economic data. On Wednesday, the Commerce Department issues a reading on third-quarter gross domestic product; Thursday, the Labor Department reports on personal spending, income and inflation; and Friday, the Labor Department releases its highly anticipated jobs report.

Some disappointing financial reports from Procter & Gamble Co. and Qwest Communications International Inc., as well as a management shake-up at Merrill Lynch & Co., gave the market little reason to buy ahead of the Fed meeting.

Merrill Lynch's chairman and chief executive, Stan O'Neal, retired Tuesday as expected after the brokerage last week posted the biggest quarterly loss in its 93-year history. But no replacement was named. Alberto Cribiore, a director since 2003, was named interim non-executive chairman. Merrill Lynch fell $1.86, or 2.8 percent, to $65.56.

Procter & Gamble was the biggest loser among the 30 Dow components after warning that higher commodity costs will squeeze margins. P&G fell $2.88, or 4 percent, to $68.95.

Although Qwest reported a third-quarter profit jump, its shares tumbled $1.12, or 13.7 percent, to $7.06, after the telecommunications company declined to give details about its outlook.

The technology-dominated Nasdaq performed better than the other indexes, helped by ongoing strength in such bellwethers as Apple Inc., Microsoft Corp., and Google Inc. Apple rose $1.91 to $187; Microsoft rose $1, or 2.9 percent, to $35.57; and Google rose $15.54, or 2.3 percent, to $694.77.

Crude oil prices retreated $3.15 to settle at $90.38 a barrel, after hitting a record on Monday above $93 a barrel. Gold also fell.

The dollar declined against most other major currencies, except the yen.

Declining issues outnumbered advancers by about 5 to 3 on the New York Stock Exchange. Volume has been fairly light so far this week; consolidated volume came to 3.11 billion shares Tuesday, up from 3.02 billion Monday.

The Russell 2000 index of smaller companies fell 5.57, or 0.68 percent, to 816.15.

Overseas, Britain's FTSE 100 fell 0.70 percent, Germany's DAX index fell 0.40 percent, and France's CAC-40 fell 0.55 percent. Japan's Nikkei stock average fell 0.28 percent, while Hong Kong's Hang Seng index rose 0.16 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Time to refinance is now LizPulliamWeston

2007-10-30T05:40:00.000+07:00

Rates on 2 million mortgages are scheduled to rise by the end of 2008. If yours is one of them, consider refinancing now -- if you can.

Falling home values are eroding people's equity rapidly enough that some who can refinance today might not be able to do so in a year, notes mortgage expert Dick Lepre. Even those who have plenty of equity now may face more limited options and higher costs in a few months.

That's because much of the refinance math lenders do depends on how much equity you have in your home:

If your mortgage and other home loans equal 80% or less of your home's worth, you'll typically have the most choices and be offered the best rates, contingent on your credit scores.

As your equity shrinks, though, rates tend to get higher and terms get stricter, said Lepre, a California loan officer who writes a weekly newsletter on the mortgage business. Every time you slip over an equity benchmark -- 85%, 90% and 95% -- rates tick up and your options decrease.

Once you owe more on your house than it's worth, your alternatives pretty much decline to none, at least in today's mortgage market. Lenders who were once eager to make 100% or more loan-to-value mortgages have either gone out of business or turned away from these high-risk loans.

Risk is in waiting, not acting

What a difference a few months makes. In the recent past, the only folks who had to worry about not having enough equity to refinance were those who had already gobbled it up with home-equity borrowing. Even that was a temporary situation, as ever-rising home values continued to supply more equity.

Now that home prices are dropping in many areas, the easy equity gains have turned into equity erosion. Someone with a $200,000 mortgage would have an 80% loan-to-value on a home worth $250,000, but if that home drops 10% in value, to $225,000, the same loan now represents 89% of the home's worth.

7 Trading Ideas for Monday By TradingMarkets Research

2007-10-30T05:29:00.000+07:00

Here are 7 trading ideas for today. This list comes directly from the TradingMarkets Stock Indicators page and is based upon our latest quantitative research.

Bullish

5+ Consecutive Down Days: These are stocks that have closed down for five or more consecutive days and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving average that close down for five or more days have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.Kendle International (NasdaqGS:KNDL - News). KNDL's PowerRating (for Traders) is 7.

5+ Consecutive Lower Lows: These are stocks that have made a lower low for five or more consecutive days and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving average that make lower lows for five or more days have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.

Horizon Lines (NYSE:HRZ - News). HRZ's PowerRating (for Traders) is 6.

2-Period RSI Below 2: These are stocks that have a 2-period RSI reading below 2 and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving with a 2-period RSI reading below 2 have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.

National Instruments (NasdaqGS:NATI - News) . NATI's PowerRating (for Traders) is 7.

Stocks Down 10% or More: These are stocks that have lost 10% or more over the past five days and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving average that have lost 10% or more over the past five days have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.

Immucor (NasdaqGS:BLUD - News). BLUD's PowerRating (for Traders) is 7.

Bearish

5+ Consecutive Up Days: These are stocks that have closed up for five or more consecutive days and are trading below their 200-day moving average. Our research shows that stocks trading below their 200-day moving average that close up for five or more days have shown negative returns, on average, 1-week later. Historically, these stocks have provided traders with a significant edge.

Countrywide Financial (NYSE:CFC - News) & Lennary (NYSE:LEN - News). CFC's PowerRating (for Traders) is 4, and LEN's PowerRating (for Traders) is 3.

Stocks Up 10% or More: These are stocks that have gained 10% or more over the past five days and are trading below their 200-day moving average. Our research shows that stocks trading below their 200-day moving average that have gained 10% or more over the past five days have shown negative returns, on average, 1-week later. Historically, these stocks have provided traders with a significant edge.

Abbot Laboratories (NYSE:ABT - News). ABT's PowerRating (for Traders) is 4.

Go to TradingMarkets.com for Today's Top 25 Stocks.

Oil Surges to New Record Near $94

2007-10-30T05:27:00.000+07:00

By John Wilen, AP Business Writer

Crude Prices Jump Sharply, Nearing $94 As Dollar Weakens and Mexico Suspends Some Production NEW YORK (AP) -- Oil futures surged to a new record near $94 Monday, propelled by the weak dollar and news that Mexico's state oil company had suspended a fifth of its oil production due to stormy weather.Crude futures rallied late in the session as the euro rebounded against the dollar, analysts said. The euro hit a record high against the dollar early Monday morning, then declined only to rally back later in the day.

"The dollar seems to be the force that's driving us now," said Phil Flynn, an analyst at Alaron Trading Corp., in Chicago.

The dollar's descent against other major currencies has drawn investors to crude futures as a hedge against the weakening currency and made dollar-denominated oil futures less expensive to people dealing in other currencies, said David Moore, commodities strategist with the Commonwealth Bank of Australia in Sydney.

Oil prices were also supported by news that Mexico's Petroleos Mexicanos, or Pemex, was to temporarily halt as much as 600,000 barrels of daily crude production.

"Mexico shut in production for a few days," which will likely disrupt imports and cut domestic oil inventories, said Chip Hodge, energy portfolio manager at John Hancock Financial Securities in Boston.

The Mexican oil fields are expected to return to service later this week.

Light, sweet crude for December rose $1.67 to settle at a record $93.53 a barrel on the New York Mercantile Exchange after rising as high as $93.80 earlier, a trading record. Crude prices are closing in on the inflation-adjusted highs hit in early 1980. Depending on the how the adjustment is calculated, $38 a barrel then would be worth $96 to $101 or more today.

Oil prices have jumped 10 percent since the Energy Department on Wednesday reported that oil supplies dropped sharply during the week ended Oct. 19. That news came amid rising political tensions in the Mideast.

Prices on Monday were also supported by fighting in Turkey between armed forces and Kurdish rebels, and the U.S. government's imposition last week of harsh penalties against Iran, the world's fourth largest oil producer.

Other Nymex energy futures were also higher. Gasoline for November delivery rose 5.34 cents to settle at $2.3274 a gallon, while November heating oil rose 3.21 cents to settle at $2.4646 a gallon.

November natural gas futures, which expired at the end of the Nymex session, rose 5.1 cents to settle at $7.269 per 1,000 cubic feet.

In London, December Brent crude rose $1.63 to settle at $90.32 a barrel on the ICE Futures exchange.

At the pump, the national average price of a gallon of gas rose 0.7 cent overnight to $2.856 a gallon, according to AAA and the Oil Price Information Service. Gas prices have risen nearly a dime in two weeks.

Oil prices could get another boost this week if the Federal Reserve cuts interest rates.

"The central bank will in all likelihood cut rates again, thus pressuring the dollar even further and providing underlying support to commodities in general," wrote Edward Meir, an analyst at MF Global UK Ltd., in a research note.

Despite oil's relentless march higher in recent weeks, many analysts argue that the price increases are being driven by speculation, not market fundamentals. Bullish news headlines out of Turkey, Iran and, on Monday, Mexico, contribute to this buying frenzy, these analysts argue.

"There is no shortage of news that speculators can use now to push oil prices higher," said Fadel Gheit, an analyst at Oppenheimer & Co.

Associated Press writers George Jahn in Vienna, Gillian Wong in Singapore and AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.

Wall Street Rises As Fed Meeting Looms

2007-10-30T05:25:00.000+07:00

By Madlen Read, AP Business Writer
Stocks Lift As Wall Street Awaits Fed Meeting; Oil Prices Surge, Passing $93 for First Time
NEW YORK (AP) -- Wall Street advanced Monday as investors undeterred by record oil prices speculated that the Federal Reserve will cut interest rates later this week to boost the slow economy and lure more buyers into the troubled credit markets.The Fed begins its two-day meeting Tuesday, and the market widely expects a rate reduction the following day. Central bankers lowered rates by a half-point in September for the first time in four years after the credit markets seized up and posed the threat of recession. The economy has a hard time growing if companies can't borrow and lend money.

But with energy prices soaring to new records, the risk of inflation -- which tends to accelerate when rates are low -- may give policy makers some pause. Crude oil futures soared above $93 a barrel for the first time on the New York Mercantile Exchange Monday after a storm led Mexico's state oil company to suspend about a fifth of its oil production.

The Fed remains concerned about inflation but is likely to lower the target federal funds rate by a quarter-point due to overriding credit worries, said Scott Wren, equity strategist for A.G. Edwards & Sons.

"It's kind of a psychological sort of move," Wren said. "A 25 basis-point cut isn't going to ease the credit crunch. But it'll give the Fed a little more time to figure out what's going on with the economy."

The Dow Jones industrial average rose 63.56, or 0.46 percent, to 13,870.26.

Broader stock indicators also gained. The Standard & Poor's 500 index rose 5.70, or 0.37 percent, to 1,540.98, while the Nasdaq composite index rose 13.25, or 0.47 percent, to 2,817.44.

Treasury bond prices rose modestly as bond investors grew more cautious in their rate expectations. The yield on the 10-year Treasury note, which moves inversely to the price, slipped to 4.38 percent, from 4.41 percent late Friday.

The dollar was mixed against rival currencies, while gold prices rose to 27-year highs.

Light, sweet crude for December rose $1.67 to settle at a record $93.53 a barrel on the New York Mercantile Exchange after rising as high as $93.80.

Though record-high crude prices and rising metal prices hurt consumers, they helped boost the stocks of companies who sell commodities. ExxonMobil Corp. and Alcoa Inc. were among the biggest gainers in the Dow.

Alcoa rose $1.08, or 2.7 percent, to $40.43, and ExxonMobil rose $1.40 to $93.61.

In addition to the hope for a rate cut, an earnings report from electronics retailer RadioShack Corp. encouraged Wall Street. RadioShack, after swinging to a third-quarter profit thanks to reduced expenses and improved inventory, rose 80 cents, or 4.1 percent, to $20.42.

Worries about Office Depot Inc.'s results, however, caused the retailer's shares to drop $2.86, or 14.1 percent, to $17.43. Three analysts downgraded the stock after the company said it will postpone its third-quarter earnings report.

Earnings so far have generally shown weakness in the financial and housing sectors but strength in others.

"It's a stock-pickers' kind of market. If you're in the right sectors, you're going to do well, but if you're in the broader market, you've got exposure to those weak sectors," said Rob Lutts, president and chief investment officer of Cabot Money Management.

Nearly 300 companies in the S&P 500 reported third-quarter earnings by last Friday, and on average posted a profit decline of 4.9 percent, said Nick Raich, director of equity research for National City's private client group. The figure was wider than the consensus, but primarily because of the dismal results at companies with exposure to housing and the credit markets. Eight of the S&P 500's 10 sectors reported average earnings gains of 8 percent or more, and five of those sectors posted double-digit gains.

In other corporate news, investors awaited the fate of Merrill Lynch & Co.'s chief executive Stan O'Neal, who was reportedly close to resigning amid broad criticism for leading the company to its biggest quarterly loss in its 93-year history. Merrill shares rose $1.33, or 2 percent, to $67.42.

Trading was relatively light Monday. Consolidated volume came to 3.02 billion shares, down from 3.51 billion Friday. Advancing issues outnumbered decliners by about 4 to 3 on the New York Stock Exchange.

The Russell 2000 index of smaller companies rose 0.33, or 0.04 percent, to 821.72.

In Asian trading, Japan's Nikkei stock average rose 1.17 percent, and Hong Kong's Hang Seng index rose 3.89 percent. In European trading, Britain's FTSE 100 rose 0.67 percent, Germany's DAX index advanced 0.76 percent, and France's CAC-40 added 0.71 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Dollar Hit Record Low by Yan Xu

2007-10-29T23:50:00.000+07:00

The dollar extended its loss versus the euro and sterling on expectations that the Fed may cut interest rates again next week. The dollar index slumped to a fresh all-time low at 77.035. The euro approached 1.44 versus the dollar, while the sterling rose to as high as 2.0571.

This week¡¯s economic data, including housing sales, durable goods orders, weekly jobless claims and today¡¯s consumer sentiment index, all showed signs of economic growth slow down. University of Michigan consumer sentiment index fell from 83.4 to 80.9 in October, below the estimate of 82.

It is widely expected that the Fed will lower rates by a quarter-percentage point to 4.00%. Under the pressure of housing slump and rising credit costs, the nation¡¯s economic growth may slow down in the future. The overall sentiment on the dollar is bearish.

Eurogroup Chairman Junker said in a newspaper interview published today that last week¡¯s G7 statement limited to the yuan showed they did not reach agreement on the yen and dollar foreign exchange range. He added that he preferred a stronger euro and the currency¡¯s current trading level was not yet an alarm-causing level. The euro may rise further to reach next target area at 1.4420-50 versus the dollar.

EURUSD will face interim resistance at 1.44, followed by 1.4420 and 1.4450. Additional ceilings will emerge at 1.4480, backed by 1.45. Support starts at 1.4350, backed by 1.4320, 1.43 and 1.4280. Subsequent floors are eyed at 1.4250.

GBPUSD encounters interim resistance at 2.0550, backed by 2.0570 and 2.06. Subsequent ceilings will emerge at 2.0620, followed by 2.0650 and 2.0680. On the downside, support begins at 2.05, followed by 2.0470 and 2.0450. Additional floors are eyed at 2.0430, backed by 2.04 and 2.0350.Rising Oil Boosted CAD & AUD

Rising oil prices boosted the commodity currencies, such as the Canadian dollar and the Australian dollar. Crude Oil hit record high at 92.22 per barrel today. The Canadian dollar strengthened to 0.9592 versus the dollar, while the Australian dollar rallied to 0.9176 against the dollar. With increasing demand of gas in the coming winter, oil prices are likely to surge higher.
Yen Fell on Core CPI Decline

The yen fell against high yielding currencies after a report showed core inflation declined in Japan, indicating the end of deflation fight may delay. Excluding food and energy prices, core CPI dropped 0.1% in September. The euro rose from 163 to round 164.50 versus the dollar, and the dollar remained around 114 against the dollar.

USDJPY encounters interim resistance at 114.30, backed by 114.50 and 114.80. Subsequent ceilings will emerge at 115, followed by 115.20 and 115.50. On the downside, support begins at 114 and 113.80, followed by 113.50. Additional floors are eyed at 113.20, backed by 113 and 112.70.

Oil Rises but Pulls Back From $93 Record By John Wilen, AP Business Writer

2007-10-29T23:47:00.000+07:00

NEW YORK (AP) -- Oil futures rose Monday, but pulled back from a new trading record above $93 set after Mexico's state oil company suspended a fifth of its oil production due to stormy weather.

The news that Petroleos Mexicanos, or Pemex, was to temporarily halt as much as 600,000 barrels of daily crude production came amid rising political tensions in the Mideast, a weakening U.S. dollar and a tight supply outlook that had already pushed crude oil to record prices."Mexico shut in production for a few days," which will likely disrupt imports and cut domestic oil inventories further, said Chip Hodge, energy portfolio manager at John Hancock Financial Securities in Boston.

Oil prices have jumped 9 percent since the Energy Department on Wednesday reported that oil supplies dropped sharply during the week ended Oct. 19. The Mexican oil fields are expected to return to service later this week.

Prices were also supported by fighting in Turkey between armed forces and Kurdish rebels, and the U.S. government's imposition last week of harsh penalties against Iran, the world's fourth largest oil producer.

However, many analysts argue that oil prices have risen to levels not supported by crude's underlying demand and supply fundamentals, and are due for a correction.

Light, sweet crude for December rose 33 cents to $92.19 a barrel on the New York Mercantile Exchange after rising as high as $93.20 in overnight trading. Crude prices are closing in on the inflation-adjusted highs hit in early 1980. Depending on the how the adjustment is calculated, $38 a barrel then would be worth $96 to $101 or more today.

Other Nymex energy futures were also higher. Gasoline for November delivery rose 2 cents to $2.294 a gallon, while November heating oil rose 1.09 cent to $2.4434 a gallon.

Natural gas futures rose 11.2 cents to $7.33 per 1,000 cubic feet.

In London, December Brent crude advanced 50 cents to $89.19 a barrel on the ICE Futures exchange.

The weak dollar was also supporting energy futures. The dollar's descent against other major currencies has drawn investors to crude futures as a hedge against the weakening currency and made dollar-denominated oil futures less expensive to people dealing in other currencies, said David Moore, commodities strategist with the Commonwealth Bank of Australia in Sydney.

Oil prices could get another boost this week if the Federal Reserve cuts interest rates.

"There is not shortage of news that speculators can use now to push oil prices higher," said Fadel Gheit, an analyst at Oppenheimer & Co.

Associated Press writers George Jahn in Vienna, Gillian Wong in Singapore and AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.

Midday Action, Oct. 29 By Jody Osborne

2007-10-29T23:45:00.000+07:00

Gains continue Monday for stocks on interest rate cut hopes. However, gains have been light so far to start the week. Another record high for oil prices has pushed oil producer stocks higher, but also negatively impacts sentiment. The normal bout of merger news to start a week is missing, although Oracle (ORCL) did withdraw its bid for BEA Systems (BEAS). Overall, with expectations for a Fed rate cut Wednesday, stocks could see gains leading into the announcement.

Oil prices hit a new all-time high Monday with the December contract reaching a price of $93.20 this morning. Currently, crude is up about 50-cents to trade near $92.40 a barrel. News that Pemex, the state-owned Mexican oil producer, halted operations for a few days has pushed prices higher. Pemex averages about 600,000 barrels a day. Of course, the fact that the Fed is expected to cut rates is also pushing prices higher.

BEAS decided that it needs $21 a share, which is much higher than the $17 Oracle was offering. ORCL decided on Sunday withdrew its offer and there are no guarantees the company will even reenter a bid at $17 in the future. Shares of BEAS are trading flat Monday at a price near $16.50. Oracle shares are also flat near a price of $21.40.

Merrill Lynch (MER) is a company in the news Monday. The financial giant is expected to announce the resignation of its CEO Stan O’Neal. After reporting a larger than expected third quarter loss, shareholders are calling for changes and the Wall Street Journal believes that his resignation is very near. MER shares are actually down slightly on the news.

In earnings news, Verizon (VZ) reported a profit of $1.27 billion with earnings per share coming in at 63-cents, a penny ahead of estimates. Revenues also were slightly above expectations at $23.77 billion. VZ also raised its stock buyback plan by $500 million to $2.5 billion. Despite this positive news, VZ shares are higher by just half a percent to $45.85.

The Fed meeting will get underway tomorrow with their decision on interest rates expected Wednesday afternoon. Fed fund futures are pricing in a 90 percent chance of at least a 25 basis point cut. A 25-basis point cut is seeing just about 70 percent chance with 20 percent odds for a 50-basis point cut. Stocks are likely to price in a 25-basis point cut heading into the meeting.

Market moves higher on rate cut hopes By Jennifer Coogan

2007-10-29T23:43:00.000+07:00

NEW YORK (Reuters) - Stocks rose on Monday but the gains looked shaky as investors weighed whether equities still have room to move higher if the Federal Reserve cuts interest rates this week.

Shares of Exxon Mobil (NYSE:XOM - News) and other energy companies led gains on the Dow after U.S. crude futures set a record at $93.20 a barrel on Monday.

The S&P has gained about 2 percent over the past week on speculation the Fed will cut its benchmark fed funds rate by 0.25 percentage point to 4.5 percent. The Fed's rate-setting committee will meet on Tuesday and Wednesday, with a decision expected on Wednesday.

"We continue to be propelled by hopes of a rate cut. It seems most likely the Fed is going to do it, but the real question is what happens after," said Jim Awad, chairman of W.P. Stewart Asset Management in New York.

The recent advance by stocks in anticipation of a rate cut may leave no room for further gains once it comes.

"My gut tells me we have discounted an awful lot and we're in for a reality check," Awad said.

The Dow Jones industrial average (DJI:^DJI - News) was up 40.40 points, or 0.29 percent, at 13,847.10. The Standard & Poor's 500 Index (^SPX - News) was up 2.84 points, or 0.18 percent, at 1,538.12. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was up 4.01 points, or 0.14 percent, at 2,808.20.

The S&P financial sector index (^GSPF - News) was down 0.4 percent. Thrifts and mortgage lenders were the worst-performing sub-sector on the S&P. Adding to the gloomy forecast for the sector, Swiss bank UBS AG (VTX:UBSN.VX - News) warned it may face more write-downs on its fixed income portfolio, joining other major banks that have been bruised in the mortgage market crisis.

Exxon shares were up 1.6 percent to $93.70 on the NYSE. Chevron (NYSE:CVX - News) stock gained 1.2 percent to $92.72.

In earnings news, consumer electronics chain RadioShack (NYSE:RSH - News) said it swung to a quarterly profit from a loss a year ago. RadioShack shares jumped 7.4 percent to $21.08 on the NYSE.

Shares of Merrill Lynch & Co Inc (NYSE:MER - News) were down 0.8 percent to $65.55 as investors awaited word on the fate of the investment bank's chairman and chief executive, Stan O'Neal. News reports have said Merrill's board was likely to force O'Neal's departure, possibly as early as Monday. Merrill's stock had surged on Friday on reports hinting at his departure.

10 Financial Steps You Can't Afford to Put Off ByJeffrey Strain

2007-10-29T23:39:00.000+07:00

Putting off for tomorrow what you can do today could end up hurting your wallet.

According to University of Calgary professor Piers Steel in a study published earlier this year in Psychological Bulletin, a peer-reviewed journal by the American Psychological Association, more than one in four Americans consider themselves chronic procrastinators, while only 5% felt this way in 1978.Why should this concern you? According to Steel, "People who procrastinate tend to be less healthy, less wealthy and less happy." For example, a delay in filing taxes costs the average person $400, while credit card use for last-minute Christmas shopping increased 500% from 1991 to 1999.

Are you a financial procrastinator? When it comes to your own finances, have you been avoiding tasks that you know are important and postponing them until a later date?

Here are 10 financial tasks that you know you should do, but may have been putting off. Answer each to see how much of a financial procrastinator you truly are:

1. Are you paying off your credit card in full each month? You know that you pay a fortune to borrow money from credit card companies and that you should pay off your credit card in full each month, but are you doing it? If you have too much credit card debt to pay it in full this month, have you at least put into place a system to get yourself out of credit card debt?

2. Are you contributing to your 401(k) up to the match? You would think that most people would jump at the chance to receive free money. If your company matches a certain percentage of your 401(k) contribution, that is exactly what they are offering you, but studies indicate there is only a 50% chance that you are actually taking this free money.

3. Have you written your will? Accidents happen and even those who are young should have a will, but many people make excuses as to why they haven't gotten around to creating this important financial document. It may be that you don't want to think about it or you believe you have plenty of time, but the reality is that you never know when you may die. Even more important, many people fail to set up a living will and other important information that they will need to have their wishes carried out if they can not make decisions for themselves.

4. Have you built an emergency fund? You know you need one, but have you taken the time to figure out how much money you really need in case of an emergency and set up a plan to achieve that goal? Emergencies happen to the best of us, and not building an emergency fund is something you will regret if when the unexpected happens.

5. Have you created a budget? You know you should have one so you know where your money is going. Many people fail to create a budget, because they fear what they may see. But creating a budget is a cornerstone of getting your finances in order and everyone should at least have a basic plan in place.

6. Have you compared your insurance rates this year? Insurance is a competitive business and prices can change dramatically from year to year. The best way to make sure you are getting the best price on your insurance is to compare the rates once a year. Not doing so can cost you hundreds of dollars. This can also be done with a lot of other bills that you pay.

7. Have you checked your credit report this year? In the past you could make the excuse that it cost too much to get your credit report, but now that you qualify for a free credit report from each of the three credit rating agencies at annualcreditreport.com, there is no good excuse not to find out what is inside them. Mistakes in your credit report can cost you a lot of money.

8. Have you opened an online bank account? Online banks tend to pay a lot more interest than traditional banks when it comes to savings accounts. If your money is still sitting in a traditional bank earning a couple of percentage points interest at most, your failure to open one of the many online banking accounts available is costing you money. This is one of many banking moves you should make.

9. Do you check your tire pressure each month? Making sure that your tire pressure is correct is one way to help save on gas consumption. Yet many people, while aware of this, still don't spend the five minutes it takes to make sure their tire pressure is correct each month -- costing them not only money in wasted gas, but also the cost of additional wear on the tires.

10. Have you had a home energy audit? Energy companies want to help you save money by showing what areas of your house are leaking energy. Many will perform energy audits for free if you simply ask, while many more will do it for a nominal fee. You can even do it yourself online.

How did you score? If you are not a financial procrastinator, you should have answered "yes" to all of the questions. If you answered no to any of them, it should give you an idea on how much you procrastinate on your finances and provide a list of things that you know you need to get done.

Take the initiative and break yourself from the financial procrastination habit and vow to complete each step you haven't taken before the end of the month.

Merrill Lynch CEO Close to Exit

2007-10-29T10:56:00.000+07:00

NEW YORK (AP) -- Stan O'Neal, the beleaguered chief executive of Merrill Lynch & Co., was reportedly close to resigning Sunday amid broad criticism for leading the world's largest brokerage to its biggest quarterly loss since it was founded 93 years ago.In a week that included an $7.9 billion write-down related to subprime mortgages and O'Neal's unauthorized overture to sell the company to retail bank Wachovia Corp., the board of Merrill Lynch reached a broad consensus Friday for his dismissal, according to several media reports. He would become the highest-ranking casualty of the global credit crisis that swept through Wall Street's biggest investment banks during the third quarter.

An announcement of his departure could come as soon as Sunday evening or Monday morning, according to reports in The Wall Street Journal and The New York Times.

A Merrill Lynch spokesman declined to comment Sunday.

Merrill's 11-member board, which currently includes O'Neal as chairman, was expected to initiate a search to find a replacement that will include both internal and external candidates.

O'Neal, 56, came under fire Wednesday when Merrill Lynch announced a $2.24 billion loss as big bets on mortgage-backed securities were rendered almost worthless because of a global credit squeeze. His fate was also plunged into doubt after he initiated talks about a possible merger with Wachovia, according to the Times. Such a deal could have handed O'Neal a $250 million separation package if he wasn't chosen to lead the new company.

O'Neal, who rose to power five years ago, was known for shaking up top management and putting a greater emphasis on riskier bets rather than the safety of just selling stocks. That strategy -- which handed Merrill Lynch record results during the market's peak -- came with a heavy cost during the tumultuous third quarter. The company said Wednesday it didn't know what impact it would have in the current earnings period.

O'Neal shouldered the blame for the earnings miss.

"I'm not going to talk around the fact that there were some mistakes that were made," he said in a conference call with analysts Wednesday. Merrill Lynch shares plunged for two days, then spiked Friday amid speculation O'Neal might be forced out.

Investors, who have seen Merrill's shares slump by 30 percent this year, will now be keenly interested in who might take control. Widely tipped as a successor is Laurence Fink, currently chairman and CEO of asset manager BlackRock Inc. He's credited with being one of Wall Street's most powerful players in the fixed-income market, which has been slammed by a global aversion to risk as mortgage-backed securities lost significant value during the summer.

Fink had dinner with O'Neal on Thursday but has yet to meet with Merrill's board, according to a person familiar with the matter who was unauthorized to speak on the record. Merrill Lynch owns a 49 percent stake in BlackRock.

Internally, Gregory Fleming, Merrill's co-president, has been named as a possible replacement, as has Bob McCann, who heads Merrill's brokerage division.

There was also speculation that Fink, Fleming and McCann might enter into some power-sharing arrangement until the board can find a permanent replacement.

Stocks Up After New Home Sales Rise

2007-10-25T23:03:00.000+07:00

NEW YORK (AP) -- Stocks turned higher Thursday after a surprise gain in new home sales eased some of Wall Street's concerns about the housing sector.

The Commerce Department said sales of new homes rose 4.8 percent in September from August's levels, a pleaant surprise for a market that had a decline. The data was particularly reassuring after a drop in existing home sales sent stocks tumbling early in the previous session.The department's report earlier in the morning on orders of big-ticket items was less upbeat. Durable goods orders fell 1.7 percent in September, worse than the uptick economists had anticipated after August's significant 5.3 percent drop. Meanwhile, the Labor Department said claims for unemployment dipped last week by a smaller number than economists predicted.

From the market's perspective, the bright side to the weaker reports is that they could compel the Federal Reserve to lower interest rates again to boost spending. The central bank, which reduced rates last month by a half-percentage-point, is scheduled to meet next week to decide on monetary policy.

And meanwhile, most corporate earnings showed respectable growth Thursday. Motorola Inc. managed in the third quarter to post its first quarterly profit this year. The cell phone maker's earnings expectations for the fourth quarter were higher than forecasts, and shares rose 74 cents, or 4 percent, to $19.29.

In mid-morning trading, the Dow Jones industrial average rose 30.81, or 0.23 percent, to 13,706.06, recovering from an earlier loss.

Broader stock indicators also turned higher. The Standard & Poor's 500 index rose 3.77, or 0.25 percent, to 1,519.65, while the Nasdaq composite index rose 4.58, or 0.17 percent, to 2,779.34.

Bonds fell after the positive home sales report. The yield on the benchmark 10-year Treasury note rose to 4.36 percent from 4.35 percent late Wednesday.

In other earnings news, Aetna Inc. on Thursday boosted profit forecasts after posting a 4 percent rise in third-quarter earnings. The health insurer cost cuts and saw medical membership increase. Aetna rose $1.80, or 3.4 percent, to $54.70.

The dollar fell against most other major currencies, except the yen, while gold prices rose.

Crude oil futures for December delivery rose $1.32 to $88.42 a barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies was up 0.30, or 0.04 percent, at 811.15.

Advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange, where volume came to 249.1 million shares.

Stock markets overseas were mostly higher.

In Asian trading, Japan's Nikkei stock average fell 0.45 percent, but Hong Kong's Hang Seng index rose 0.78 percent. In European trading, Britain's FTSE 100 rose 1.33 percent, Germany's DAX index rose 1.00 percent, and France's CAC-40 rose 1.16 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Stocks Finish Higher on Earnings Reports

2007-10-24T07:52:00.000+07:00

By Joe Bel Bruno, AP Business Writer
NEW YORK (AP) -- Wall Street ended an erratic session with a big advance Tuesday as investors uneasy about the economy were reassured by solid earnings from blue chip names including Apple Inc. and American Express Co. The Dow Jones industrial average rose more than 100 points.Technology stocks were among the biggest gainers after Apple surpassed analysts' expectations with a 67 percent jump in fiscal fourth-quarter profit on strong sales of Macintosh computers, iPods and iPhones. Two Dow components -- American Express, one of the largest credit card companies, and chemicals maker DuPont Co. -- posted better-than-expected profit gains as well.

"Housing is obviously still a big concern, and the question is how much does it spill over into the rest of the economy," said Alexander Paris, economist and market analyst for Chicago-based Barrington Research. "I think the trend for the market is down unless investors see something positive, and the market drifts back up again."

He said investors were also adjusting their positions ahead of key housing data this week. On Thursday, the National Association of Realtors will release its existing home sales report, while the Commerce Department reports new home sales a day later.

The Dow rose 109.26, or 0.81 percent, to 13,676.23.

Broader stock indicators also had solid gains. The Standard & Poor's 500 index rose 13.26, or 0.88 percent, to 1,519.59; the Nasdaq composite index rose 45.33, or 1.65 percent, to 2,799.26.

The stock market extended its recovery from Monday after plunging Friday. Wall Street had sold off for five straight sessions as worries about the credit market's effect on the economy escalated, when several blue chip companies offered sluggish outlooks and S&P downgraded more mortgage-backed securities.

Higher energy prices and a weakening dollar are also hanging over the market. Treasury Secretary Henry Paulson said in a speech Tuesday China must allow its currency, the yuan, to gain in value more quickly, to counter imbalances in the economy and make monetary policy more effective in responding to inflation.

Analysts believe investors are also looking for the Federal Reserve to throw them a lifeline when it meets next week to decide the future of rates. Wall Street widely expects the central bank will again lower rates after its half-point cut in September.

"I think you're going to see trading will be really choppy between now and next week's Federal Reserve meeting," said Scott Fullman, director of investment strategy for I.A. Englander & Co. "The market is very sensitive right now, and I continue to tell my clients that I don't mind being long so long as you're hedged -- risk levels are still high."

Treasury bonds were little changed amid a disappointing auction of new issues, and as investors moved back into stocks. The yield on the 10-year note closed at 4.40 percent, unchanged from Monday. In late trading, it rose to 4.41 percent.

Oil prices dipped on expectations of rising U.S. crude inventories, and concerns over a continuing buildup of Turkish military forces along the northern Iraqi border. A barrel of light, sweet crude fell 75 cents to $85.27 on the New York Mercantile Exchange.

The dollar fell against most other major currencies, while gold rose.

Earnings commanded most of the attention on Tuesday as investors looked for any indication about how companies fared during the quarter, and what they expect for the balance of the year. Recent results reinvigorated investors after companies posted a string of downbeat results last week, a disappointment that contributed to a 366-point slide in the Dow Friday.

So far, roughly 41 percent of the Standard & Poor's 500 companies have reported results -- with 51 percent beating expectations, according to the rating agency.

Apple rose $11.80, or 6.3 percent, to $186.16 after the company reported it shipped a record 2.16 million Macs in the quarter, an increase of 34 percent from the same period a year ago. That generated $3.1 billion, or about half of the company's revenues for the quarter.

American Express said late Monday higher spending by cardholders pushed third-quarter profit up 10 percent. Shares rose $1.79, or 3.2 percent, to $58.66.

DuPont posted a larger profit for the third quarter on agricultural and nutritional products in Latin America and the company boosted its full-year outlook. The stock rose 24 cents to $46.81.

AT&T Inc., the nation's largest telecommunications company, reported profit rose 42 percent after its acquisition of BellSouth Corp. Shares rose 85 cents, or 2.1 percent, to $42.02.

The Russell 2000 index of smaller companies rose 8.45, or 1.05 percent, to 818.53.

Advancing issues led decliners by a 2 to 1 margin on the New York Stock Exchange, where consolidated volume came to 3.21 billion shares, compared to 3.34 billion on Monday.

In Asian trading, Japan's Nikkei stock average inched up 0.07 percent, while Hong Kong's Hang Seng index soared 3.54 percent. In European trading, Britain's FTSE 100 rose 0.85 percent, Germany's DAX index rose 0.61 percent, and France's CAC-40 rose 0.77 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

Stocks End Volatile Session Higher By Madlen Read, AP Business Writer

2007-10-23T10:46:00.000+07:00

NEW YORK (AP) -- Wall Street finished a back-and-forth session higher Monday as investors overcame some of their nervousness about the credit markets and uneven earnings and found solace in the technology sector.Several companies including drug maker Merck & Co. reported decent third-quarter results, but investors were unhappy with rival drug maker Schering Plough Corp.'s results. They were also mindful of the downbeat profit outlooks from several blue chip companies last week.

Still, after an early slide, the market seemed to grow optimistic about Apple Inc.'s earnings, which did top Wall Street's expectations when the company reported after the closing bell. The eager anticipation of the report sent tech stocks higher, and by early afternoon, other stocks were tagging along.

Disappointing earnings and Standard & Poor's downgrade of another series of mortgage-backed securities sent stocks plunging Friday, taking the Dow Jones industrials down 366 points.

"It is not unusual for a big down day to be followed by an up day. I think the bargain hunters are out there," said Brian Gendreau, investment strategist for ING Investment Management. "It seems there's fairly strong demand out there, despite all the bloodletting on Friday."

He noted that while some big-name companies' results have disappointed Wall Street, about two-thirds of earnings so far have beat estimates and outlooks remain upbeat for the technology and health care sectors.

The Dow rose 44.95, or 0.33 percent, to 13,566.97, after falling more than 100 points early in the session.

Broader stock indicators finished higher, with tech stocks leading. The S&P 500 index rose 5.70, or 0.38 percent, to 1,506.33, and the technology-dominated Nasdaq composite index rose 28.77, or 1.06 percent, to 2,753.93.

The Russell 2000 index of smaller companies climbed 11.29, or 1.41 percent, to 810.08.

Advancing issues outnumbered decliners by about 9 to 7 on the New York Stock Exchange, where consolidated volume came to 3.4 billion shares, compared with a heavy 4.05 billion shares traded Friday.

Treasury bonds were little changed after Friday's steep gains. The yield on the 10-year note, which moves inversely to its price, was flat at 4.40 percent.

On Friday -- the 20-year anniversary of the Black Monday crash -- investors sold off stocks and bought up safer assets like U.S. Treasury bonds as the prospect of a thaw in the frozen credit markets grew dimmer.

Though the major U.S. stock indexes showed signs of strength Monday, there are still big worries on Wall Street about how problems in the financial markets might drag on corporate and economic growth -- concerns that make the record highs reached earlier this month by the Dow and the Standard & Poor's 500 index appear unreasonable.

"It may take a little time here, a week or two, of trying to heal," said Steven Goldman, chief market strategist at Weeden & Co.

Overseas markets were unsettled, responding to Friday's drop on Wall Street. In Asian trading, Japan's Nikkei stock average declined 2.24 percent, while Hong Kong's Hang Seng index dropped 3.7 percent. In later European trading, Britain's FTSE 100 fell 1.05 percent, Germany's DAX index fell 1.13 percent, and France's CAC-40 fell 1.38 percent.

Strong tech earnings could give a boost to investor sentiment.

Apple's fiscal fourth-quarter earnings handily topped Wall Street's expectations as the company set a record for quarterly shipments of its Mac computers and sold more than 1 million iPhones. Apple shares, which finished the regular session up $3.94, or 2.3 percent, at $174.36 rose 6 percent in after-hours electronic trading.

Netflix Inc., the online DVD rental service, said its third-quarter earnings rose 23 percent as its subscriber base grew. The company's results topped its expectations. Netflix slipped 23 cents to $23.01 in the regular session but rose 13 percent in after-hours trading.

American Express Co., one of the nation's biggest credit card issuers, said Monday higher spending by cardholders pushed third-quarter profit up 10 percent but that it set aside more money for write-downs. Amex fell 24 cents to $56.87 during the session and rose more than 2 percent in after-hours trading.

Schering-Plough's profit gain, however, fell short of expectations. The drug maker fell $4.37, or 13.4 percent, to $28.34.

Analysts said the upbeat results that arrived Monday won't erase all of investors' concerns.

"People are worried there are more time bombs out there," Gendreau said. He posited that a big reason the market sold off as sharply as it did last week was because fund managers wanted to lock in positive returns for the year before any more bad news hits.

Over the weekend, the world's economic leaders not only said that smoothing the turbulent global financial markets will require vigilance, but they also warned of inflation risks -- which puts central banks like the U.S. Federal Reserve in a tight spot. The Fed lowered interest rates on Sept. 18 to make borrowing cheaper amid a growing credit market crisis, and Wall Street hopes policy makers reduce rates again when they meet next week.

Fed Governor Randall Kroszner at a speech in Washington reaffirmed that the central bank will "act as needed" to calm the financial markets. He also said problems with structured credit products -- which dampened the profits at several banks in the third quarter -- are recovering, but gradually.

Crude oil futures settled down $1.04 to $87.56 a barrel on the New York Mercantile Exchange. Gold also declined, while the dollar rebounded sharply against several major currencies.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

IMF Urges Nations to Focus on Stability By Harry Dunphy, Associated Press Writer

2007-10-21T13:48:00.000+07:00

IMF Urges Governments to Try to Ensure Smooth Functioning of Financial Markets WASHINGTON (AP) -- Finance ministers and central bankers should remain vigilant to ensure the smooth functioning of financial markets that have been jarred by a global credit crisis, the International Monetary Fund's policy-making committee said Saturday.
The group also said in a statement that monetary policy of member governments should focus on achieving price stability while keeping a close eye on inflation in the light of rising food and oil prices, among other factors.

Problems in the global economy came to a boil when credit markets froze on Aug. 9 as fear overwhelmed many investors. Troubles that began in the market for subprime mortgages in the U.S. spread to many other kinds of debt on international markets.

In an attempt to soothe jittery markets, the IMF statement urged "continued vigilance to maintain well-functioning financial markets."

The ministers said they would continue "to work together to analyze the nature of the disturbances and consider lessons to be learned and actions needed to prevent further crises."

"The turbulence has revealed a number of problems that may be deeper than the specific episode that triggered the tensions," said Italian Economy Minister Tommaso Padoa-Schioppa, the new head of the IMF's policy-making committee.

The head of the IMF, Spain's Rodrigo de Rato, was optimistic despite the recent concerns about the credit market.

"The global economy is expanding from a solid foundation," he said.

The IMF statement said global economic growth was moderating amid disturbances in financial markets, but financial growth in countries with fast-growing economies and "strong fundamentals" continue to support the world economy.

Ministers said the financial innovation that led to the packaging of securities based on subprime mortgages in the U.S., "while having contributed to enhanced risk diversification and improved market efficiency, have also created some new challenges that need to be properly addressed."

Padoa-Schioppa said some of the institutions involved in the packaging needed to be monitored.

"There is a clear need for supervisory audits even for the great financial institutions that create these instruments, to understand better what their creations are doing out on the market. This is clearly a reason for concern," he said.

The IMF statement recognized the growing importance of sovereign wealth funds -- huge pools of money controlled by governments -- in international financial markets.

"While recognizing their positive role in enhancing market liquidity and financial resource allocation," the statement said, "the committee welcomes the work by the IMF to analyze issues for investors and recipients of such flows, including a dialogue on identifying best practices."

The IMF took up the issue because of growing concern that countries with these funds, ranging from China to Kuwait, might buy up companies, banks and real estate in the West.

The ministers paid tribute to de Rato, who is leaving at the end of the month, and said they looked forward to working with his successor, France's Dominique Strauss-Kahn.

"This is a sad day for the IMF but should be a very satisfying day for you," Padoa-Schioppa told de Rato at a news conference.

Based in Washington, the 185-member organization, which helps out countries in financial crisis and makes loans to poor nations, has been criticized for not allowing countries with fast-growing economies more of a say in IMF decisions.

Under an informal practice dating back to the founding of the IMF and its sister institution the World Bank 63 years ago, an American heads the bank and a European leads the fund, a process critics of the two institutions say is outmoded.

De Rato said the institution needed to update its governance. The ministers said they had made some progress working on a formula to increase the representation of fast-growing economies in IMF decision-making, but advocacy groups said the reform program was "going nowhere."

"The Europeans refuse to give up their stronghold on the institution and the United States is not really interested in the poorest countries having a bigger say at the table," said Elizabeth Stuart, senior policy adviser to Oxfam International, an aid group and frequent IMF critic.

Associated Press writer Desmond Butler contributed to this report.

World Bank: http://www.worldbank.org

International Monetary Fund: http://www.imf.org

Oil rises towards $90 high as dollar sinks

2007-10-19T17:42:00.000+07:00

LONDON (Reuters) - Oil climbed back towards its new $90 peak on Friday, supported by tight fuel stocks ahead of winter and a softening dollar.

U.S. crude gained 29 cents to $89.76 a barrel by 6:05 a.m. EDT. It hit an all-time high of $90.02 in early trade on Friday. London Brent crude edged up 12 cents to $84.72.

Oil's rally -- which has seen six straight days of record highs for U.S. crude -- has been fuelled by unprecedented weakness in the dollar, a factor that has supported all dollar-denominated commodities.

The greenback fell to a new record low against the euro on Friday, knocked by sentiment that weak U.S. economic and financial market indicators may force another interest rate cut.

"The dollar weakened further, spurring some investment into oil as a hedge against dollar weakness," said David Moore, commodity strategist from the Commonwealth Bank of Australia.

"And there are still concerns that oil market conditions will remain tight over the northern winter."

Oil has averaged just over $67 a barrel this year, but is climbing towards the inflation-adjusted high of $101.70 hit in April 1980, a year after the Iranian revolution.

The price run-up has concerned OPEC, which may call for an early formal meeting to discuss a further output increase. An OPEC supply rise of 500,000 barrels per day (bpd), agreed last month, will take effect on November 1.

Although stocks of fuel in top consumer the United States rose last week, crude inventories stand about 4 percent below a year ago, while gasoline and distillate stocks are about 7 percent below last year.

Rising political tension between Turkey and Kurdish rebels in northern Iraq has also supported gains, as traders worry about a disruption in flows of Iraq's northern oil exports.

(Additional reporting by Felicia Loo in Singapore)

This Is Your Brain on Money by Laura Rowley

2007-10-19T17:38:00.000+07:00

One afternoon on his way to lunch, New Yorker Jason Zweig found a roll of bills on the sidewalk that totaled $300.

He subsequently picked up the restaurant check for his office mates, took his girlfriend out to dinner, and splurged on some books, music, and a few classy ties. When all was said and done, he'd blown $430 -- or $130 more than his lucky strike.

Eager Spenders

Researchers have found that an unexpected windfall makes people more eager to spend than an expected one, as Zweig discovered in writing his new book, "Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich."

In the book, Zweig, a senior writer at Money magazine and editor of the revised edition of Benjamin Graham's classic "The Intelligent Investor," examines the psychological, neurological, and biological phenomena that drive foolish financial behavior.

"It's very important for people to realize that this is not a study by very smart people of how stupid the rest of us are," says Zweig. "If you talk to the researchers, they make the exact same mistakes that they spend their careers documenting."

Here are five ways your brain can trick you into making financial blunders, and how to avoid them:

1. Familiarity breeds admiration, not contempt.

Psychological research shows that we're attracted to the familiar, Zweig says. A simple test proves his point: Take a digital photo of yourself, and using photography-manipulation software, flip it to the reverse image so that if it was shot from the left, it now looks as if it was taken from the right.

"You'll have a strong preference for one of those images and not the other -- because one is your mirror image, the other is the image that people see when they look at you," says Zweig. "Whenever a stock, an industry, a market, a country, or an investing theme is familiar, you'll like it better. But familiarity is very dangerous."

One example: More than 5 million Americans have at least 60 percent of their 401(k) savings in the stock of the company where they work. Investment advisors recommend holding no more than 5 percent.

On the other hand, what about the famous advice of legendary Fidelity fund manager Peter Lynch, to invest in what you know? "That's not what Peter Lynch said," Zweig says. "He did invest in Chrysler after getting a minivan, but he didn't invest only because he liked the minivan -- he researched the stock. If he hadn't liked what he saw when he researched the company, he wouldn't have bought the stock."

Whenever you feel an investment is a no-brainer, stop and write down 8 to 10 different reasons why you must be right, Zweig advises. If you find after three or four that you can't think of any more, think twice before buying.

2. The pattern you swear you see is probably an illusion.

The brain is built to detect patterns, even when confronted with an arbitrary occurrence. "A small streak of random luck looks to us like part of a longer pattern of reliable foresight," Zweig writes.

After someone learns a set of circumstances through which they made money, the brain will fire up with the pleasure chemical dopamine when those conditions occur again. "If you see something once, then twice, you automatically, involuntarily expect it a third time," Zweig says.

"You associate a signal with a result -- 'when I listen to that guy on CNBC and I do what he tells me, I make money.' If that happens to you twice, and if you see him again on TV, dopamine is released, and you'll buy what he recommends because just seeing him will give you a good feeling. The intensity of expectation really gets you into trouble."

Investors relying on technical analysis tend to succumb to this problem. "As soon as a stock seems to conform to a pattern that has made money before, an 'I-got-it' effect kicks in, making investors feel sure they know what's coming next -- regardless of whether there's any objective reason to believe they do," Zweig explains. Even sophisticated investors tend to hire money managers who are on a three-year hot streak.

Zweig says one way to prevent your brain from reacting to these "three-peats" is to use dollar-cost averaging -- investing the same amount every month in a fund or stock that's part of as larger long-term strategy based on your goals.

3. Everything is relative.

The brain will hook onto a number and then compare subsequent figures to the initial one, a phenomenon known as "anchoring and adjustment." It's why real estate agents tend to show a potential buyer the most expensive house first, because subsequent ones will seem inexpensive; and why mutual fund companies nearly always launch new funds at a "cheap" price of $10 a share.

The solution? Avoid the numbers. Zweig quotes Warren Buffett, who says he always likes to look at investments without knowing the price, "because if you see the price, it automatically has some influence on you."

4. Tune out the play-by-play.

If you're someone who obsessively monitors the prices of your holdings, watch out. Several studies by Princeton Nobel laureate Daniel Kahneman and other researchers have found that the more often people watch an investment move up and down, the more likely they are to trade in and out short-term -- and the less likely they are to earn a high return over the long term.

"If owning stocks is a long-term project for you," Kahneman tells Zweig, "following their changes constantly is a very, very bad idea. It's the worst possible thing you can do, because people are so sensitive to short-term losses. If you count your money every day, you'll be miserable."

5. Beware of group-think.

"When the market gets really greedy or really fearful, basically everyone's brain starts to work the same way," says Zweig. "That's why many people buy high and sell low."

A New York University researcher performed MRI scans on subjects as they watched the Clint Eastwood film "The Good, the Bad and the Ugly." "Throughout most of the movie, the brain scans were all over the map," says Zweig. "Then there's a scene in which Clint Eastwood blows the bad guy's head off. Everyone had the same reaction -- fear and alarm. The lesson is that, at emotional turning points, people think alike."

To avoid following the herd, set your own financial policies and rules, and stick by them.

"Try to determine what your long-term goals are, put a really good financial plan in place, and follow it," says Zweig. "The worst imaginable thing you can do is listen to Pied Pipers who tell you 'here are seven tricks to beat the pros at the game.' That game will make you miserable."

Stocks Rebound on Strong Earnings

2007-10-17T21:41:00.000+07:00

By Joe Bel Bruno, AP Business Writer

Stocks Open Higher on Strong Results From JPMorgan Chase, Techs; Tame Inflation Reading NEW YORK (AP) -- Wall Street rebounded Wednesday after key earnings reports from JPMorgan Chase & Co. and Yahoo Inc. and other companies topped Wall Street forecasts.

Better-than-expected earnings reports helped investors shake some of their concerns about the ongoing housing slump and lingering problems in the credit markets. The market largely looked past weak housing data, while the Labor Department's reading on September consumer price inflation came in close to analyst expectations.Strong results from component companies of the Dow Jones industrial average, including JPMorgan Chase, Altria Group Inc. and United Technologies Group Inc., helped encourage investors that third-quarter earnings overall might come in better than expected. And technology shares led the Nasdaq higher after robust earnings from Intel Corp., Yahoo Inc. and International Business Machines Corp. late Tuesday.

In early trading, the Dow rose 53.65, or 0.39 percent, to 13,966.59. The Standard & Poor's 400 index rose 9.35, or 0.61 percent, to 1,547.88, while the Nasdaq composite index rose 30.73, or 1.11 percent, to 2,794.64.

Wall Street's recovery followed two days of declines. Stocks slid Tuesday after banks including Wells Fargo & Co. and KeyCorp reported disappointing quarterly results due to the ongoing credit crisis. Meanwhile, investors were also spooked after Federal Reserve Chairman Ben Bernanke said the housing slump may drag on through next year.

JPMorgan Chase said third-quarter profit rose 2 percent record earnings in asset management helped the country's third-largest bank overcome hefty writedowns on its leveraged loans credit loss provisions resulting from the summer's credit market turmoil. Its shares rose $1.09, or 2.4 percent, to $46.20.

Yahoo said late Tuesday that third-quarter profit fell less than analysts had expected, raising hopes of a turnaround at the Internet search company. Yahoo gained $2.03, or 7.6 percent, to $28.72.

Chipmaker Intel posted a 43 percent increase in third-quarter earnings late Tuesday. The company's shares jumped $1.02, or 4 percent, to $26.50.

Beyond earnings, investors absorbed two economic reports that appeared to give the Fed more wiggle room in cutting rates. Central bankers will next meet Oct. 30-31.

U.S. consumer prices rose modestly last month, suggesting there are still inflation risks, but they likely wouldn't get in the way of an interest rate cut. The consumer price index rose 0.3 percent in September, reversing August's 0.1 percent decline. The core CPI, which excludes volatile food and energy prices, advanced 0.2 percent for a fourth-straight month.

Meanwhile, the Commerce Department said new home construction slowed to the weakest pace in 14 years during September. Housing starts plunged 10.2 percent to a seasonally adjusted 1.191 million annual rate, after falling 3.2 percent in August to 1.327 million.

Investors are still waiting for the Fed to release its Beige Book report at 2 p.m. EDT. The report gauges regional economic conditions based on data gathered by the Fed's 12 regional district banks.

Oil traded higher ahead of the Energy Department's weekly petroleum report, which is forecast to show crude and gasoline inventories rose last week. A barrel of light, sweet crude rose 36 cents to $87.97 on the New York Mercantile Exchange.

Stocks Dip on Bernanke's Sobering Words

2007-10-16T21:47:00.000+07:00

y Madlen Read, AP Business Writer

Wall Street Retreat After Bernanke Comments Revive Worries About Economy, Earnings

NEW YORK (AP) -- Wall Street extended its retreat Tuesday after Federal Reserve Chairman Ben Bernanke said the night before that the slumping housing market remains a "significant drag" on the economy.Bernanke's comments during a speech at the New York Economic Club revived concerns that a recovery from the summer's credit crisis might take longer than expected -- a sobering thought for investors, who are sifting through mixed third-quarter earnings and watching energy costs rise.

The stock market had its biggest drop in more than five weeks Monday after a consortium of banks led by Citigroup Inc., which reported a steep profit decline that day, announced plans to set up a fund to help bail out the credit markets.

On Tuesday, Wells Fargo & Co. shares fell more than 3 percent after the bank said its third-quarter earnings increased by a bit less than analysts anticipated, and that it boosted loan loss reserves in anticipation of further problems in consumer credit. KeyCorp shares also fell more than 3 percent after the Midwest regional bank posted a 33 percent drop in third-quarter profit.

In early trading, the Dow Jones industrial average fell 47.15, or 0.34 percent, to 13,937.65.

Broader indicators also fell. The Standard & Poor's 500 index slipped 6.96, or 0.45 percent, to 1,541.75, and the Nasdaq composite index dipped 14.29, or 0.51 percent, to 2,765.76.

Treasury bond prices rose, pushing down the yield on the 10-year Treasury note to 4.67 percent from 4.68 percent at Monday's close. Prices and yields move in opposite directions.

Bernanke said in his speech that the deepening housing slump probably will be a drag on economic growth. Still, he again pledged to "act as needed" to help financial markets that were sent reeling this summer.

He did say that inflation remains in check. That could be a key factor for policymakers when deciding whether to cut interest rates at their Oct. 30-31 meeting.

But while core inflation -- which excludes volatile food and energy prices -- is mild, oil prices are pushing further into record territory.

Despite expectations of higher inventories in the weekly U.S. supply report released on Wednesday, a barrel of light, sweet crude rose 51 cents to $86.64 on the New York Mercantile Exchange, on fears Turkey will pursue Kurdish rebels into Iraq and disrupt oil supplies in the region.

Investors will get some more economic data on Tuesday with the National Association of Home Builders/Wells Fargo housing market index for October scheduled to be released at 1 p.m. EDT. The report is expected to show a decline from September.

Overseas, Japan's Nikkei stock average closed down 1.27 percent. Britain's FTSE 100 fell 0.42 percent, Germany's DAX index fell 0.36 percent, and France's CAC-40 fell 0.87 percent.

New York Stock Exchange: http://www.nyse.com

USD Supported by Data by Korman Tam

2007-10-15T23:30:00.000+07:00

The major currency pairs held steady within range in the Friday session, with the dollar initially stronger against the majors following better than expected US economic data. The greenback pushed higher to 1.4156 versus the euro and 117.68 against the yen, but retreated from technical resistance against the pound sterling.

The data quelled fears that deteriorating housing market conditions would spillover onto the US consumer, resulting in a pullback in consumption. September retails sales outpaced estimates, with the headline reading improving by 0.6%, exceeding calls for a decline to 0.2% from 0.3% in August. The excluding autos figure reversed the 0.4% decline from August, rising by 0.4% in September, edging out forecasts for 0.3% growth. The headline PPI reading revealed higher than expected inflation up 4.4% annually versus 2.2% from the previous reading, and up 1.1% versus a 1.4% decline a month earlier. The core PPI figure, which excludes food and energy, was slightly softer than expected up 0.1% m/m and 2.0% y/y. Meanwhile, the preliminary University of Michigan consumer sentiment survey for October was weaker than anticipated, at 82.0, versus calls for an increase to 84.0 from 83.4 from September.

Fed funds futures are pricing in approximately 32% probability of an October rate cut versus nearly 50% chance of an ease a week earlier. We expect the major currency pairs to continue to trade within range heading into next week. Several key economic reports are slated for release that will provide traders additional clues on the Fed’s monetary policy decision at the end of the month. The data consist of NY Fed manufacturing survey, industrial production, capacity utilization, NAHB housing index, CPI, housing starts, leading economic indicators, and the Philadelphia Fed index. Also expected to impact markets are the Fed’s Beige Book as well as Fed Chairman Bernanke’s speeches.

Traders will try to discern to extent of the US economic slowdown by way of next week’s manufacturing and housing reports, while contrasting the Fed’s need to keep inflation at bay. We look for the greenback to remain slightly supported ahead of next Wednesday’s CPI data, which is expected to increase 0.2% m/m and 2.7% y/y. The core readings are unchanged from the previous month at 0.2% m/m and 2.1% y/y. The combination of last month’s rebound in payrolls and inflation continuing to linger at current levels; we look for the Fed to leave policy unchanged at the end of the month, instead opting to ease at the December 11th meeting.

FX Mixed, Carry Trades Favored by Korman Tam

2007-10-15T23:19:00.000+07:00

The greenback was mixed in the Thursday session, firming against the sterling and yen, but losing ground versus the euro and Aussie. Economic data released today was slightly better than expected but had little impact on the currency market.

The August trade deficit shrunk to $57.59 billion, better than both forecasts at $59.0 billion and the July reading of $59.25 billion. Import prices increased by 1.0% in September, while export prices edged up by 0.3% -- both largely in line with expectations. Meanwhile, weekly jobless claims improved to 308k, down from the previous week at 317k.

Market focus will shift to Friday’s US economic reports, consisting or retail sales, producer price index, business inventories and the University of Michigan consumer sentiment survey. Retail sales for September are forecasted to slip to 0.2% versus a 0.3% reading from the previous month, while the excluding automobiles figure is estimated to improve to 0.3% compared with a 0.4% decline in the prior month. September PPI is seen up 0.4%, versus a 1.4% decline from August, while core PPI is unchanged at 0.2%. The preliminary October University of Michigan consumer sentiment survey is forecasted to improve to 98.3, up from 97.9.
Yen Stumbles

With global equity bourses stabilizing, carry trades have returned to favor – pushing the yen to its lowest level since late July against the euro and Aussie at 167.61 and 106.62, respectively. Dollar/yen also broke out of its weeklong consolidation to hit a two-month high at 117.76.

The Bank of Japan, as largely expected, kept monetary policy unchanged when it announced its decision early Thursday morning with an 8-1 vote. Bank Governor Fukui attributed the BoJ’s unchanged stance to lingering nervousness in global financial markets, particularly stemming from the US housing debacle. Fukui said that although “conditions in the US and European markets have improved, they are still unstable”. Further, the BoJ maintained the same outlook from its September monthly report.

Japan’s August core machinery orders declined by more than forecasted -- falling by 7.7% versus calls for a 6.0% decline m/m and the annualized figure dropped by 2.6%. The August unadjusted current account surplus rose 42.1% y/y to 2.0810 trillion yen, less than the 2.1932 trillion yen expected. Meanwhile, the August trade surplus surged by 185.2% to 892.2 billion yen.

USDJPY holds steady near its 2-month highs around 117.60, with resistance starting at 117.75, followed by 118 and 118.40. Subsequent ceilings are eyed at 118.80, backed by 119 and 119.50. On the downside, support begins at 117.40, followed by 117 and 116.75. Additional floors will emerge at 116.40, backed by 116 and 115.50.

Report Ranks Jobs by Rates of Depression

2007-10-14T22:05:00.000+07:00

By Kevin Freking, Associated Press Writer

Personal Care, Restaurant Industries, Diaper Changers Have Highest Rates of Depression WASHINGTON (AP) -- People who tend to the elderly, change diapers and serve up food and drinks have the highest rates of depression among U.S. workers.Overall, 7 percent of full-time workers battled depression in the past year, according to a government report available Saturday.
Women were more likely than men to have had a major bout of depression, and younger workers had higher rates of depression than their older colleagues.

Almost 11 percent of personal care workers -- which includes child care and helping the elderly and severely disabled with their daily needs -- reported depression lasting two weeks or longer.

During such episodes there is loss of interest and pleasure, and at least four other symptoms surface, including problems with sleep, eating, energy, concentration and self-image.

Workers who prepare and serve food -- cooks, bartenders, waiters and waitresses -- had the second highest rate of depression among full-time employees at 10.3 percent.

In a tie for third were health care workers and social workers at 9.6 percent.

The lowest rate of depression, 4.3 percent, occurred in the job category that covers engineers, architects and surveyors.

Government officials tracked depression within 21 major occupational categories. They combined data from 2004 through 2006 to estimate episodes of depression within the past year. That information came from the National Survey on Drug Use and Health, which registers lifetime and past-year depression bouts.

Depression leads to $30 billion to $44 billion in lost productivity annually, said the report from the Substance Abuse and Mental Health Services Administration. The report was available Saturday on the agency's Web site at http://oas.samhsa.gov

The various job categories tracked could be quite broad, with employees grouped in the same category seemingly having little in common.

For example, one category included workers in the arts, media, entertainment and sports. In the personal care category, a worker caring for toddlers at a daycare center would have quite a different job from a nursing aide who helps an older person live at home rather than in a nursing home.

Just working full-time would appear to be beneficial in preventing depression. The overall rate of depression for full-time workers, 7 percent, compares with the 12.7 percent rate registered by those who are unemployed.

Oracle Offers $6.7B for BEA Systems

2007-10-12T23:58:00.000+07:00

By Michael Liedtke, AP Business Writer

Oracle Offers to Buy Rival BEA Systems for $6.7B in Cash SAN FRANCISCO (AP) -- Pouncing on an opportunity to add another weapon in an increasingly bitter business software battle, Oracle Corp. has offered to buy struggling rival BEA Systems Inc. for $6.7 billion in its latest shot aimed at another industry leader, SAP AG.
Oracle unveiled its $17-per-share cash offer Friday, less than a month after activist investor Carl Icahn announced he had bought a large stake in BEA in hopes of forcing a sale of the troubled software maker.

The billionaire now owns a 13.2 percent stake in BEA, giving Oracle a potentially pivotal ally in its latest effort to acquire the maker of so-called middleware -- computer coding that is commonly used on the Internet to make applications interact more smoothly with information stored in databases.

Redwood Shores-based Oracle has been stalking San Jose-based BEA for years, but has been consistently rebuffed in its overtures.

But now BEA appears to be backed into the corner.

Besides facing pressure to sell from the tenacious Icahn, BEA also has been dealing with an accounting mess tied to its mishandling of past stock option grants that has prevented it from meeting regulatory deadlines to file its quarterly and annual financial reports. The delinquency has threatened BEA's listing on the Nasdaq Stock Market and contributed to a sharp decline in its shares.

Oracle's offer, representing a 25 percent premium over BEA's closing stock price Thursday, provided an immediate lift. BEA shares soared $4.48, or 33 percent, to $18.10 in morning trading Friday, reflecting investors' expectations that the company will be sold to Oracle or possibly another suitor.

"We look forward to completing a friendly transaction as soon as possible," Oracle President Charles Phillips said.

A call to BEA for comment early Friday wasn't immediately returned.

Oracle has shown it won't take no for an answer in the past. In 2003, Oracle launched a hostile takeover bid for PeopleSoft Inc. and then spent the next 18 months overcoming its rival's staunch resistance before completing the $11.1 billion acquisition.

That began the biggest shopping spree in industry history as part of a strategy mapped out by Oracle's flamboyant chief executive, Larry Ellison. Convinced that more business software customers wanted a one-stop shop to buy all their technology, Ellison set out to create one by devouring Oracle's smaller rivals.

Oracle has already spent about $25 billion on 30 acquisitions during the past three years in an expansion aimed at surpassing Germany-based SAP in the sales of business applications software, which automates a wide range of administrative tasks.

SAP initially derided Oracle's acquisition strategy as misguided, but earlier this week joined the fray by agreeing to pay $7 billion for Business Objects SA, a maker of software that helps companies analyze their internal deal. That deal countered Oracle's $3.3 billion purchase of Hyperion Solutions earlier this year.

In another sign that SAP is taking the Oracle threat seriously, the company has acknowledged that one of its subsidiaries infiltrated Oracle's computers to help customers maintain their software. Oracle is suing SAP in federal court, alleging its rival's behavior broke laws protecting intellectual property.

Although SAP remains the largest business software maker, Oracle's expansion has been paying off handsomely for shareholders. The company earned a record $4.3 billion in its last fiscal year and its stock price has climbed by more than 60 percent since 2004, creating more than $40 billion in shareholder wealth.

Oracle shares fell a penny to $22.44 in morning trading Friday.

AP Business Writer J.W. Elphinstone in New York contributed to this story.

FX Dictated by JPY Pairs by Korman Tam

2007-10-11T13:12:00.000+07:00

The dollar was mixed, edging higher versus the yen but falling against the euro and sterling. Economic data from the US saw wholesale inventories grow in August by 0.1%, but lower from the prior month at 0.3%. The greenback will likely remain confined to recent ranges ahead of key reports due out later in the week, including August trade balance, PPI, retail sales, business inventories, and University of Michigan consumer sentiment survey.
Euro Rebounds

ECB Board member Liikanen delivered a hawkish tone in his speech on Wednesday, reiterating the upside risks in price stability. While he sees potential for market turbulence to create downside uncertainty for growth, but policy decisions are separate from measures to address volatility – adding that the Bank would not bail out failed investors. Liikanen commented on exchange rates, saying euro levels were not a target, but rather a source of information. Meanwhile, the ECB’s Gonzalez-Paramo said that foreign exchange rates should be reflective of fundamentals, with volatile rates detrimental to growth. He added that the market turmoil has increased growth uncertainties in the Eurozone, but the crisis is too short term. The ECB is largely expected to lift interest rates by another 25-basis points to 4.25% by year-end given the current outlook for inflation and growth.

Traders will turn to Q2 GDP from the Eurozone, which is expected to be revised lower from the initial reading. Eurozone Q2 GDP is seen declining to 2.5%, down from 3.2% and at 0.3% versus 0.7%.

EURUSD holds steady above the 1.41-level at 1.4120. Support begins at 1.41, followed by 1.4065 and 1.4020. Subsequent floors will emerge at 1.40, backed by 1.3960 and 1.3930. On the upside, resistance is seen at 1.4160, followed by 1.42 and 1.4240. Additional gains will target 1.4280 – the pair’s all-time high, followed by 1.43 and 1.4350.

JPY Slumps across the Board

The yen fell against the majors early in the Wednesday session as traders jumped back into the carry trades, pushing euro/yen to 166.23, aussie/yen to 105.61 and sterling/yen to 240.36. By late New York trading, the yen recouped some of its losses to stabilize ahead of the BoJ meeting and monthly report on Thursday.

The Bank of Japan is not expected to change policy given the current global economic scenario. Data to be released from Japan will also see August machinery orders, which is expected to reverse July’s 17% increase, declining by 6%.

USDJPY holds steady near the 117-level, with resistance eyed at 117.60, followed by 118 and 118.40. Subsequent ceilings are seen at 118.75, backed by 119 and 119.50. On the downside, support begins at 117, backed by 116.70 and 116.30. Additional floors will emerge at 116, followed by 115.60 and 115.25.

Fed Minutes Support USD by Korman Tam

2007-10-10T13:05:00.000+07:00

The greenback edged up higher against the majors in early US trading, firming to 1.4017 versus the euro and 117.48 against the yen before easing in the afternoon ahead of the FOMC monetary policy minutes. The currency market remains quiet as traders returned to their desks following the holiday to a dearth of fresh economic news.

The dollar continues to benefit from last week’s stronger than expected jobs data, which tempered expectations for further aggressive rate cuts from the FOMC. Nonetheless, we still expect the Fed to cut rates by 25-basis points at the end of October.

The minutes of the FOMC meeting revealed a unanimous decision to cut rates by 50-basis points to 4.75% due to the extremely weak conditions of the housing market, tighter financial conditions and their potential impact on the economy. Members expressed concern that a weaker economy would further exacerbate tightening credit conditions and reinforce the slowdown. Although members remained concerned about the upside inflation risks, the Fed is more confident a decline in inflation would be sustained. Also, the Fed sees further slowing of employment likely but labor markets should remain fairly tight.

St Louis Fed President William Poole reinforced sentiment from Friday’s payrolls report, saying the jobs data does not suggest the downside risks many foresee are materializing. He expects the housing market to remain weak for several more quarters and not stabilize until well into 2008. Poole remained uncertain over the duration for market turmoil, saying there was a substantial way to go. He added that the Fed has a responsibility to help maintain normal market processes but has neither the power nor the desire to bail out bad investments.

The US economic calendar remains light until the end of the week, with the reports to include TICS, trade balance, PPI, retail sales, and the University of Michigan consumer sentiment. We expect the dollar to remain within range this week, with traders likely to buy up the euro, sterling, and Aussie on dips. Markets will also focus on data released from the Eurozone, which will see GDP and industrial production.

Fed members all backed bold rate cut

2007-10-10T01:29:00.000+07:00

WASHINGTON (Reuters) - All members of the U.S. Federal Reserve's policy-setting committee agreed a half-percentage point federal funds interest rate cut was necessary to shield the economy from credit disruptions and an intensifying housing slowdown, minutes of their September 18 meeting released on Tuesday showed.In order to help forestall some of the adverse effects on the economy that might otherwise arise, all members agreed that a rate cut of 50 basis points at this meeting was the most prudent course of action," the minutes said.

Members thought sharply lowering benchmark overnight borrowing costs could help offset the effect of tighter financial economic conditions on the economy.

Without such a move, policy-makers were afraid that tightening credit conditions and the deepening housing slump that had been triggered by a spike in mortgage foreclosures would lead to "significant weakness" in business activity and hiring.

Also, the damage to financial markets as credit dried up could get worse and further chill economic activity, members of the U.S. central bank's interest-rate setting Federal Open Market Committee thought.

At that meeting, the Fed slashed its target for benchmark overnight borrowing costs to 4.75 percent, surprising many in financial markets who had been expecting a quarter-percentage point rate cut to 5 percent.

The minutes show that at the time, Fed policy-makers saw the economic situation fraught with a high degree of uncertainty as they considered whether the credit crunch would substantially slow economic growth or not.

They believed risks were tilted toward a slowdown in economic activity, but also noted that the economy had previously weathered periods of financial disruption with only limited broadly adverse effects.

At the same time, the Fed believed that tighter credit would restrain economic growth in the period ahead, and worried that any further disruptions in financial markets could magnify risks to the economy.

The Fed discussed "additional policy options" to address strains in money markets at the meeting, but no decisions were taken at the time, the minutes said.

(Reporting by Mark Felsenthal)

Market Update

2007-10-06T04:48:00.001+07:00

4:15 pm : Stocks surged on Friday following a better than expected employment report. The S&P finished at a new all-time closing high while the Nasdaq finished at its highest level since February, 2001. The Dow was on pace for a record close, but some profit taking in the final 20 minutes caused it to close roughly 30 points below its highest level.

September nonfarm payrolls, as reported by the Dept. of Labor rose 110,000, slightly larger than the gain of 100,000 that had been expected. Perhaps more significantly, the 4,000 decline previously reported for August that had caused so much angst was revised sharply higher to an increase of 89,000.

Payroll increases of 100,000 per month represent a 1% annual growth rate. That is below the trend in periods of strong economic growth in previous years when labor force participation was rising, but it is still reasonably solid.

Average hourly earnings rose 0.4%. This was a bit more than expected and follows a 0.3% August increase. The unemployment rate is at a low 4.7%.

These numbers don't show significant weakness in any respect. Briefing.com believes there is no reason for the Fed to ease rates based on these data. This employment report should greatly ease recession fears which means it is moderately bullish for the stock market.

Earnings warnings from Washington Mutual (WM 36.07, +0.79) and Merrill Lynch (MER 76.70, +1.92) were not enough to prevent the financial sector (+1.4%) from outperforming. Both companies stated that third quarter earnings will take a big hit due to the credit market turmoil. Merrill Lynch expects to report a net loss per diluted share of up to $0.50.

The consumer discretionary

USD Fails to Keep Post-Jobs Gains by Korman Tam

2007-10-06T04:44:00.000+07:00

The highly anticipated September labor report triggered a whipsaw reaction in the currency market with the greenback initially rallying sharply following the release. However, upon further analysis of the data, the currency quickly relinquished its gains to fall to fresh session-lows against the euro at 1.4156 and sterling at 2.0442.

The headline non-farm payrolls figure for September was higher than forecast, expanding by 110k compared with an upwardly revised August payrolls at 89k (prev -4k). The unemployment rate, however, crept up higher to 4.7% versus 4.6% from a month earlier – which is the highest level since July 2006. Closer inspection of the report reveals that the August revision was mainly seasonal reflecting higher government employment, specifically in education. The jobs report shifted market sentiment of upcoming Fed policy, with US interest rate futures pricing in approximately at 52% chance of a 25-basis point rate cut in October, compared with a 72% chance prior to the release.

The labor report quelled recessionary fears and tempered expectations for further aggressive easing from the FOMC. Our medium term outlook is for a weaker dollar and view this latest bounce higher to be short-lived. Next week’s US economic calendar is light on data, consisting of the September Federal Budget, August trade balance, weekly jobless claims, PPI, retail sales, business inventories and the University of Michigan consumer sentiment.

EURUSD holds near its session highs, around 1.4140 with initial resistance seen at 1.4180, followed by 1.42 and 1.4250. Support starts at 1.41, backed by 1.4030 and 1.40.

FX Narrows Ahead of Payrolls by Korman Tam

2007-10-05T04:02:00.000+07:00

The major currency pairs will likely remain confined to a narrow range heading into tomorrow’s US jobs report. The data will have lasting implications on both the dollar and Fed policy. Consensus forecasts are calling for non-farm payrolls to improve to 94k in September, reversing sharply from the 4k decline in August. A significantly higher than expected reading, along the lines of 125k+, will likely dampen the prospects for more Fed rate cuts this year and stem further aggressive selling in the greenback. Meanwhile, a reading in NFP of beneath 50k would open the floodgates to dollar declines and heighten expectations for another 50-basis point cut at the end of the month. The unemployment rate for September is forecasted to creep up to 4.7% from 4.6% in August.

The ECB and BoE left policy unchanged today, with subsequent comments from ECB President Trichet triggering a whipsaw reaction in the euro. The dollar was initially stronger against the majors but quickly pared its gains on weak US economic data.

Weekly jobless claims edged up higher than forecasts at 317k. August factory orders and durable goods orders both declined by 3.3% and 4.9%, respectively.
Euro Rebounds

The ECB, as largely anticipated, held monetary policy unchanged when it announced its decision this morning, standing pat at 4%. The decision garnered a muted reaction from the currency market, but the subsequent press conference prompted a short-lived sell-off in the euro – hitting a session low at 1.4069 against the dollar.

ECB President Trichet walked a tightrope in his press conference as he carefully maintained a balance in assessing the risks to the Eurozone economy. Traders initially focused on Trichet’s economic outlook, saying that risks of growth are on the downside. He tempered fears though, by suggesting the fundamentals of the economy support a favorable medium term outlook – but that market volatility translates into more uncertainty. Trichet offset his dovish assessment on the economy, by maintaining that risks to inflation were still tilted toward the upside, adding that the Bank was prepared to act if necessary and to counter upside risks to price stability. He reiterated his stance on exchange rates, adding that the euro rate would be one factor in determining rate decisions.

Technical Bounce Props USD by Korman Tam

2007-10-03T22:51:00.000+07:00

The greenback found some respite in the Tuesday session despite little positive news to alter the US economic outlook. The dollar rebounded from an 18-year low against the Aussie and recovered toward the 1.4140 level versus the euro. With another bout of dismal housing data, we perceive today’s move as a technical one and a pause to further decline over the coming weeks.

The August pending home sales report showed continued deterioration, falling by greater than consensus forecasts, down 6.5%, albeit an improvement from July’s 12.2% fall. Traders will look to tomorrow’s August non-manufacturing ISM reading, durable goods orders, jobless claims, and factory orders. We expect continued weakness in the aforementioned figures, deteriorating from the previous reading. The key highlight for the week continues to be Friday’s September labor report, with FOMC policy moves likely to be derived from the result.
Euro Relinquishes Gain on USD Bounce

The euro drifted against the dollar overnight to a session low at 1.4140 amid a technical dollar bounce from oversold levels. Economic data released from the Eurozone had little impact on the currency market as the outlook for the ECB decision later in the week remains unchanged. The August unemployment rate held steady near its lows at 6.9% while producer prices were in line with expectations at 0.1% m/m and 1.7% y/y.

The ECB is set to deliberate monetary policy on Thursday and is unlikely to change interest rates. The key highlight will be the subsequent press conference at 8:30 AM from Bank President Trichet to determine whether additional policy tightening can be expected.

In light of recent economic data, particularly the German Ifo, the impact of previous rate hikes are becoming evident in the reports and may prompt the ECB to adopt a less hawkish tone. It will also be interesting to note if any mention of exchange rates will be made -- reinforcing the growing unease among Eurozone officials of the continued strengthening of the single currency, deemed to be detrimental to export competitiveness.

Economic data slated for release from the Eurozone in the coming session will see Germany service PMI, Eurozone service PMI, and August retail sales. The service PMI numbers for both Germany and the Eurozone are seen declining in September to 54.0 and 56.8, respectively. Retail sales, meanwhile are forecasted to improve on a monthly basis to 0.4% from 0.1% and stand pat on an annualized basis at 0.5%.

Aussie Pulls Off 18-year High

The Australian dollar retreated against its American namesake after advancing to an 18-year high at 0.8946, succumbing to a rebound by the greenback. The Aussie has staged a sharp rally in the past 3-months, appreciating by 16.6% from its August 17th trough at 0.7673, benefiting from a combination of robust global demand for commodities and overwhelmingly bearish sentiment surrounding the greenback.

The Reserve Bank of Australia is set to announce the results of its policy setting meeting at 7:30 PM, with the RBA seen holding interest rates unchanged at 6.5%. Inflation in Australia remains a key concern for the Bank and if the next round of CPI figures reveals another jump higher – the RBA will be largely expected to lift its benchmark lending rate by 25-basis points in November. Recall the annualized September CPI reading jumped up to the top of the RBA’s 2-3% target band at 3%, bolstering the prospects of another hike before year-end. We maintain our bullish outlook for the Aussie, with a medium-term target of 0.91.

Dollar Recoups Amid Dearth of News by Korman Tam

2007-10-02T23:53:00.000+07:00

The greenback recouped some of its losses against the euro, and sterling but remains mired near its lows as the market prepares for a barrage of key economic events in the week ahead. The state of the US economy will remain the primary focus with traders assessing the prospects for further policy easing from the FOMC this year. Of particular importance will be Friday’s labor report given last month’s dismal results. Consensus estimates are calling for a strong rebound to 94k versus a 4k decline in August. Another disappointingly weak jobs report will fuel expectations for the Fed to cut by an additional 50-basis points in October and seal the dollar’s fate for the coming months.

Earlier in the session, the September manufacturing ISM fell to its lowest reading since March at 52, softer than expected and down from a month earlier at 52.9. The prices paid component slipped to 59.0, versus 63.0 from August while the employment index crept higher to 51.7 from 51.3.

Central bank policy decisions will also dictate currency market direction. Both the Bank of England and the European Central Bank are slated to release the results of their policy deliberations on Thursday. Although neither Bank are expected to change policy, last Friday’s speculation of a surprise BoE rate cut are fresh on traders’ psyches and will likely limit the sterling’s upside gains heading into the market. Also, ECB President Trichet’s post-meeting press conference will be closely scrutinized for clues into when the Bank will raise rates again.Euro Firm Above 1.42

The euro retreated off its record highs against the dollar but holds steady above the 1.42-level. ECB President Trichet pushed the single currency lower overnight as he mentioned the US’ strong dollar policy in his comments. Trichet said he’s “noted with extreme attention that the US Treasury Secretary and … the Federal Reserve have said a strong dollar is in US interests”. The rise in the euro to record highs has prompted Eurozone government officials to express their unease with these levels, arguing that the current exchange rate is detrimental to exports.

In the session ahead, Eurozone economic data slated for release consist of August unemployment rate, and PPI. The Eurozone unemployment rate is forecasted to remain unchanged at 6.9% while PPI is forecasted to slip to 0.1% m/m and 1.7% y/y.

Greenback Mired near Lows by Korman Tam

2007-10-01T04:23:00.000+07:00

The dollar sold off across the board to end the week at fresh record lows against the euro at 1.4277 and multi-week lows versus the sterling near 2.0450. Fundamentally, little has changed in the US economic and interest rate outlook but with sentiment biased toward further Fed easing, traders have been given the green light to dump dollars. The economy remains in a precarious state with the housing market yet to reach bottom and burgeoning fears of slipping into recession.

While the barrage of economic data released this morning was mixed, it had little impact in the foreign exchange market. Inflation reports showed the PCE price index softer than expected, with the headline reading at 1.8% y/y and down 0.1% m/m. The core reading edged up by 0.1% m/m, albeit weaker than anticipated while the annualized figure fell to 1.8% from 2.1%. August personal consumption rose by 0.6%, up from 0.3% while personal income drifted to 0.3% from 0.5%. The September NAPM index tumbled to its lowest level since November 2001, falling to 437.6 versus 445.0 from August. However, the Chicago PMI reading exceeded consensus estimates for a decline to 53.3, instead rising to 54.2 from 53.4 a month earlier. The University of Michigan sentiment survey unexpectedly fell to 97.9, coming short of forecasts for 99.0 and down from 98.4 from August. The sentiment survey echoes the Conference Board’s dismal consumer confidence survey from earlier this week and is indicative of deteriorating economic fundamentals and recent market volatility.

We continue to look for more dollar weakness in the near-term. Next week’s US economic reports will provide additional clues on the state of the economy. The data consist of September manufacturing ISM, pending home sales, services ISM, durable goods orders, factory orders, and the September jobs report. Recall last month, the greenback sold off sharply following an unexpectedly dismal non-farm payrolls number, which declined by 4k. The September NF payrolls reading are seen posting a dramatic improvement to 94k.

Traders will also focus closely on central bank policy decisions from the Bank of England and the European Central Bank. The sterling came under pressure in the New York morning amid rumors circulating trading desks that the BoE would come in with a surprise rate cut. The currency quickly recouped its losses against the yen and the dollar, but the prospect of a BoE rate cut will remain fresh on traders’ minds.

Also worth noting, St Louis Fed President Poole said that the 50-basis point Fed rate cut was justified in order to help markets to recover. However, he said it is a mistake for markets to bet on further easing and policy would be determined from meeting to meeting. Poole also added that inflation expectations are firm, but the core PCE figures released today were moving in the right direction.

Stocks Slip After Data Released on Consumer Spending, Manufacturing By Joe Bel Bruno, AP Business Writer

2007-09-29T00:26:00.000+07:00

NEW YORK (AP) -- Stocks dipped Friday, the last trading day of the third quarter, as Wall Street mined mixed economic reports and remained cautious ahead of the upcoming earnings onslaught.

The stock market appeared wary of strong economic news, which could lower the chance of another rate cut. Last week, the Fed helped restore some confidence in the financial markets by reducing the target federal funds rate by a half point.

The Commerce Department said consumer spending increased 0.6 percent in August, the fastest growth in more than two years. Meanwhile, Chicago's National Association of Purchasing Management said business activity in the heavily industrialized Chicago area increased in September by more than analysts expected, and the University of Michigan said consumer sentiment during the month has held steady.

Also weighing on investors Friday was lingering concern that corporate earnings power was lessened in the third quarter. This is the last trading day of one of the most volatile periods in years -- one that pulled stocks sharply lower after the Dow Jones industrial average closed at a record 14,000.41 in mid-July.

Still, though energy and food prices are surging, core inflation appears to be under control, which is keeping rate cut hopes alive. The Commerce Department report showed that a closely watched gauge of core inflation showed a year-over-year rise in August of just 1.8 percent -- the smallest increase since a similar rise in February 2004. The reading is within the Fed's comfort zone of 1 to 2 percent.

"A second Fed cut will go a long way in reassuring the stock market that the worst is over. The focus going forward will be whether the Fed is going to lower rates to shore this up, or decide the risk of inflation is too high," said Janna Sampson, director of portfolio management at Oakbrook Investments.

The Dow shed 15.77, or 0.11 percent, to 13,897.17.

Broader indexes also declined. The Standard & Poor's 500 index fell 4.14, or 0.27 percent, to 1,527.24, and the Nasdaq composite index fell 6.86, or 0.25 percent, to 2,702.73.

Bonds rose, pushing the yield on the 10-year Treasury note down to 4.54 percent from 4.57 percent late Thursday.

The dollar fell against most major currencies as inflation appeared to be easing. The euro surpassed $1.42 for the first time, hitting a record against the U.S. currency for the seventh straight session.

The dollar's weakness has bolstered commodity prices throughout the quarter, and helped lift prices again on Friday. Crude oil prices rose 45 cents to $83.33 on the New York Mercantile Exchange.

"We're going to see crimped corporate profits if they eat those costs, and inflation if they pass those down. Neither of those are good," Sampson said.

In corporate news, shares of 3Com Corp. shot higher after the telecommunications equipment company said it will be sold to affiliates of private equity firm Bain Capital Partners LLC for $2.2 billion in cash. 3Com rose $1.28, or 34.8 percent, to $4.96.

As the tumultuous third quarter draws to a close, investors appear a bit less concerned about the tightening in the credit markets that sent stocks plummeting in late July and August. On Thursday, the Fed said banks slowed their borrowing from central bank this week to the smallest amount in six weeks, after a huge spike last week.

But while most market watchers agree that conditions have improved, the credit markets still don't appear they are back to operating normally. Levels of outstanding asset-backed commercial paper fell about 17 percent in the week ending Wednesday -- not as steep a decline as seen a few weeks ago, but still suggesting that demand isn't meeting supply.

Meanwhile, the bulk of third-quarter earnings start pouring in in mid-October, which should give investors a better idea of how companies weathered the summer's tumult and what they expect in the coming months.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 285.9 million shares.

The Russell 2000 index of smaller companies fell 4.68, or 0.57 percent, to 809.33.

In European trading, Britain's FTSE 100 fell 0.30 percent, Germany's DAX index fell 0.10 percent, and France's CAC-40 fell 0.31 percent.

In Asia earlier, Japan's Nikkei index fell 0.28 percent and Hong Kong's Hang Seng Index rose 0.29 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

USD Struggles on Soft Reports by Korman Tam

2007-09-28T00:25:00.000+07:00

The beleaguered dollar found no reprieve in today’s US economic reports, with GDP and new home sales falling short of consensus estimates, sending the currency to another record low against the euro at 1.4188. Concerns of deteriorating conditions in the US economy continue to plague the greenback, raising expectations that the Fed will cut interest rates again by at least 25-basis points this year.

The final reading for Q2 GDP growth was weaker than initially anticipated, falling to 3.8% versus calls for a decline to 3.9% from 4.0% in the preliminary reading. However, PCE prices, the Fed’s preferred gauge on inflation, crept up higher than expected, with the headline at 4.3% from 4.2% while the core PCE reading rose to 1.4% versus 1.3%. The housing market continues to deteriorate, with more evidence revealing slowing activity as new home sales plunged by 8.3% to 795,000 units in August. Meanwhile, weekly jobless claims improved to 298,000, down from the previous week at 311,000.

The week concludes with a series of key US releases on Friday morning, consisting of August PCE, personal consumption, personal income, September Chicago PMI, and the University of Michigan consumer sentiment survey. Manufacturing is seen struggling, with the Chicago PMI expected to decline to 53.3 from 53.8. The University of Michigan consumer sentiment survey is forecasted to improve slightly to 99.0, up from the preliminary reading at 98.4. However, given this week’s surprise drop in the Conference Board’s consumer confidence survey to 2-year lows, it will be interesting to see if the University of Michigan survey is resilient to the recent financial market turmoil and can shrug off burgeoning fears of recession.
Euro Buoyed

The euro continued to forge ahead against the dollar and yen amid a combination of robust Eurozone economic data and renewed signs of a faltering US economy. The single currency jumped to a fresh all-time high versus the greenback just shy of the psychologically key 1.42-level at 1.4188.

Germany’s labor report improved better than anticipated with the unemployment rate for September unexpectedly falling to its lowest level in 14-years at 8.8%. Meanwhile, unemployment change in September declined by 50k to 3.694 million. The robust data adds further support for at least another 25-basis point rate hike by the ECB before year-end.

JPY Slumps Ahead of Data

A barrage of Japanese economic data is due out this evening and will provide further clues as to if and when the BoJ may raise rates again. Our view is for the Bank to remain on hold until Q1 2008. The reports slated for release include the August labor report, retail sales, manufacturing PMI, CPI, housing spending, industrial production, and housing starts. With exceptions in household spending and industrial production, the reports are largely unchanged from the prior readings. However, industrial production is estimated to post a strong gain, improving by 3.2% in August versus a 0.4% decline in the previous month. Household spending is forecasted to gain by 1.2% compared with a 0.1% decline in the prior month.

Dollar Shrugs off Soft Data by Korman Tam

2007-09-27T14:43:00.000+07:00

The dollar was little changed against the euro and sterling despite a sharply weaker than expected August US durable goods orders. The typically more volatile figure reversed its previous month’s gains, with the headline number falling by 4.9% versus a 6.0% increase from July. Meanwhile, the excluding transportations reading posted a 1.8% drop compared with a 3.8% gain in the previous month. The disappointing data however, were overshadowed by a strong opening in the US equity bourses after an agreement was reached between GM and UAW to end the strike of auto workers. Moreover, the yen weakened across the board amid gains in global equities.

Traders will turn to several key reports due out in the Thursday session, consisting of Q2 GDP, Q2 PCE, August new home sales, weekly jobless claims and Q2 corporate profits. The final GDP growth figure is seen softer at 3.9%, down from 4.0% in the preliminary reading. The Fed’s preferred gauge of inflation, the PCE is unchanged from the previous quarter – with the headline figure holding steady at 4.2% and the core PCE reading at 1.3%. Weekly jobless claims are seen creeping up slightly to 316k, from 311k last week.
Sterling Mixed

The sterling traded sideways against the dollar, hovering above the 2.01-level while edging higher versus the yen toward the 233-mark. Data released overnight revealed slightly stronger than expected economic growth from the UK for the second quarter, with the annualized figure edging out estimates for an unchanged reading at 3.0%, instead growing at 3.1% and the quarterly reading steady at 0.8%. The current account deficit was also smaller than anticipated at 9.1 billion sterling, shrinking from 12.2 billion sterling in the first quarter.

In the session ahead, UK data will include September nationwide house prices and CBI distributive trades. The pound continues to be weighed by fears of a UK credit crunch and its subsequent impact on the overall economy, thereby raising expectations that the next rate move by the Bank of England will be a cut.

Cable has retreated since testing the descending trendline resistance at 2.03 earlier in the week and holds steady above the 2.01-mark. We expect the pair to continue to trade sideways and lag in performance relative to the euro or Aussie against the dollar, as a result of tempered rate hike expectations. Support begins at 2.0120, followed by 2.01 and 2.0070. Additional floors will emerge at 2.0040, backed by 2 and 1.9970 and 1.9940. Gains will target initial resistance at 2.0180, followed by 2.02 and 2.0230. Subsequent ceilings are seen at 2.0275 and 2.03.

Euro Climbs to Record High by Korman Tam

2007-09-27T01:02:00.000+07:00

The single currency jumped to another fresh all-time high against the greenback despite a softer than expected reading from Germany’s Ifo sentiment survey. The euro continues to benefit from fears of further deterioration in US economic fundamentals, and now sets its sights on the next key psychological resistance at the 1.42-level. Moreover, the outlook for interest rates between the Fed and the ECB also remains favorable for the euro, with the FOMC likely to further ease policy while the ECB is seen tightening by at least 25-basis points before the end of the year.

ECB Board member Liebscher reinforced the economic strength of the Eurozone. Despite the prevailing downside risks, Liebscher said the Eurozone economy is in a good state and that the economic expansion remains dynamic. Meanwhile, the ECB’s Garganas sounded a hawkish tone, suggesting that “upside risks to price inflation dominate any effects stemming from the appreciation of the euro”. He deems the main drivers of Eurozone inflation are domestic, but added that it was appropriate to await more information prior to taking additional action. Garganas also added that the primary impact of recent market turbulence would be higher risk perception and would otherwise not affect the main scenario.

Germany’s Ifo sentiment survey was lower than forecast, with the business climate index falling to 104.2, compared with calls for 105 and down from 105.8 a month earlier. The current conditions component slipped to 109.9, versus estimates for a smaller decline to 111.0 from 111.5, while the expectations index dropped to 98.7 and down from 100.4. The Ifo said that the initial signs of “brake to growth” emerging and that the retail sector climate has deteriorated considerably. However, it added there was no strong impact on export expectations from a stronger euro. The Ifo’s chief economist Nerb believes that the German business climate has been impacted by the market turbulence and foresees a softening in the Germany economic rebound rather than an end.

Eurozone economic data over the coming sessions will reveal further clues into the state of the region’s economy. The reports will include Eurozone money supply, Germany’s September labor report, Eurozone sentiment surveys, and the September Eurozone HICP.

USD Slumps on Data by Korman Tam

2007-09-27T00:59:00.000+07:00

The dollar was dragged lower in the Tuesday session on the heels of lackluster US economic reports, plunging to a new record low versus the euro at 1.4154 and again falling to parity against the Loonie. We expect the greenback to remain under pressure over the coming months amid persistent worries that the US economy may slump into recession and the increased prospects for additional rate cuts from the FOMC.

The data released earlier in the session reinforced the pessimism surrounding the US economy, with consumer confidence and housing reports pointing toward further weakness. The Conference Board’s consumer confidence index tumbled to its lowest level in nearly 2-years, at 99.8 for September down sharply from August at 105.6. The dismal confidence figure reflects heightened market volatility, growing uncertainties stemming from the housing market and worries over the prospects of a US recession. There was also renewed evidence of the slumping housing market with existing home sales down 4.3% at 5.49 million units, versus 5.75 million units in July.

Dollar Mired Near Lows by Korman Tam

2007-09-25T04:33:00.000+07:00

The dollar continues to reel from last week’s 50-basis point Fed rate cut, falling overnight to a fresh record low against the euro at 1.4129 and stumbling versus the sterling to 2.0316. Renewed fears of a faltering US economy will continue to drive the foreign exchange market this week as concerns of a possible recession weigh on the greenback. However, given the abrupt nature of the Fed’s aggressive ease, traders must keep a close eye on US inflation data for fear that the 50-basis point rate cut may strengthen inflationary pressure over the coming quarters.

Economic data slated for release this week will provide further clues on the US outlook, with reports to shed light on growth, the housing market, inflation, manufacturing, and consumer sentiment. On the whole, consensus estimates look for weaker data compared with the previous releases. The housing market slump will continue to lead the deterioration in US fundamentals, with August existing home sales seen falling to 5.49 million units, versus 5.75 million units previously and new home sales forecasted to drop to 830k units compared with 870k units in July. The final reading of Q2 GDP is estimated to be revised lower to 3.9%, from 4.0%, while the Fed’s preferred gauge on inflation is seen unchanged in Q2 with core PCE standing pat at 1.3%. Additionally, durable goods orders and Chicago PMI will provide more clues on the extent of the slowdown in manufacturing. Although durable goods orders are typically a volatile figure, estimates are calling for the number to fall by 3.1% in August, reversing the previous month’s 6.0% increase. The excluding transports reading is also seen declining, down by 1% versus a 3.8% gain a month earlier.

With additional monetary policy easing expected from the Fed this year, particular emphasis will be placed on the outlooks for central bank decisions from the ECB, BoE and BoJ. Among the banks, only the ECB is expected to maintain its current tightening cycle with another 25-basis point rate hike before year-end. However, economic data from the Eurozone will be closely scrutinized to assess the impact thus far on the region’s economy from previous rate hikes. Traders will turn to Germany’s September Ifo sentiment survey, due out early Tuesday morning at 4:00 AM, and is seen softening from August. The September Ifo expectations component is seen declining to 99.5, down from 100.4, while the current conditions figure is forecasted to fall to 111 versus 111.5.

Meanwhile, both the Bank of Japan and the Bank of England are expected to leave policy unchanged for the remainder of the year given the current global and domestic economic outlook. The BoE is even anticipated to cut rates given tightening credit conditions and the impact of global financial volatility on the UK economy. Later in the week, traders will digest Q2 UK GDP, seen unchanged at 0.7% q/q and 3.0% y/y.

A barrage of Japanese economic data is due out this week and will provide further clues as to if and when the BoJ may raise rates again. Our view is for the Bank to remain on hold until Q1 2008. The reports slated for release include the August labor report, retail sales, manufacturing PMI, CPI, housing spending, industrial production, and housing starts. With exceptions in household spending and industrial production, the reports are largely unchanged from the prior readings. However, industrial production is estimated to post a strong gain, improving by 3.2% in August versus a 0.4% decline in the previous month. Household spending is forecasted to gain by 1.2% compared with a 0.1% decline in the prior month.

CAD Hit 31-yr High 0.9940 vs Dollar by Yan Xu

2007-09-22T22:48:00.000+07:00

The Canadian dollar touched a 31-year-high at 0.9940 versus the dollar and it gave back some of its gains after a government report showed retail sales fell unexpectedly for a second month. Canada retail sales are expected to remain unchanged in July, after a 0.9% drop in June. Excluding food and energy, core retail sales may rose 0.3% versus a 0.3% decline in the previous month.

EURUSD will face interim resistance at 1.41, followed by 1.4120 and 1.4150. Additional ceilings will emerge at 1.4180, backed by 1.42. Support starts at 1.4050, backed by 1.40, 1.3980 and 1.3950. Subsequent floors are eyed at 1.39.

USDJPY encounters interim resistance at 115.80, backed by 116 and 116.30. Subsequent ceilings will emerge at 116.50, followed by 116.80 and 117. On the downside, support begins at 115.30 and 115, followed by 114.70. Additional floors are eyed at 114.30, backed by 114 and 113.70.

GBPUSD encounters interim resistance at 2.02, backed by 2.0220 and 2.0250. Subsequent ceilings will emerge at 2.0270, followed by 2.03 and 2.0320. On the downside, support begins at 2.0170, followed by 2.0150 and 2.0120. Additional floors are eyed at 2.01, backed by 2.0080 and 2.0050.

Euro Edged Lower after Weak PMI by Yan Xu

2007-09-22T22:42:00.000+07:00

After hitting a new record high at 1.4120 versus the dollar, the euro edged lower versus the dollar on weaker-than-expected manufacturing and services PMI reports from the euro zone.

The Euro zone services PMI fell from 58 to 54 in September, below the estimate of 57.5. The manufacturing PMI dropped from 54.3 to 53.2, weaker than the expectation of 53.9. Euro zone current account balance shrank from 11.4 billion euros to 3.3 billion euros in July. The main reason behind the weak figures is the recent global financial market turbulence beginning from August.

The dollar remains under pressure after the Fed cut half a percentage-point this Tuesday. Fed Chairman Ben Bernanke yesterday said credit market turmoil may make the housing recession more severe, adding to the worries over the nation’s economy. Interest-rate futures indicated traders bet a 70 percent chance of a quarter-percentage point cut to 4.50% at the Fed’s policy meeting on October 31.

The Fed’s aggressive move lifted investors risk appetite and carry trades increased modestly. That is why the dollar weakened against most of its rivals except the yen after the rate cut.

Besides, the sterling has been recovering from subprime crisis concern sparked by the Bank of England bailing out the nation’s fourth biggest home mortgage lender Northern Rock. The currency on Friday strengthened to around 2.02 versus the dollar.

Dollar Weakened to 1.41 vs Euro by Yan Xu

2007-09-21T15:10:00.000+07:00

The dollar extended its loss against its major rivals today on speculations that the Fed may continue to lower fed fund rates in the rest of the year. The euro touched 1.41 versus the dollar, while the yen strengthened to as low as 114 against the dollar.

The dollar index fell to an all-time low at 75.73 yesterday. Interest-rate futures pricing indicated traders see an 80 percent chance that the Fed may cut a quarter-percentage point to 4.50% on its policy meeting at the end of October.

In the early session, US weekly jobless claims fell 9k to 311k, beating the estimate of 321k. Philadelphia Fed business conditions index dropped from 0.4% to minus 0.6% in August, below the estimate of minus 0.2%.

Fed Chairman Ben Bernanke today said in a congressional hearing that subprime mortgage delinquencies are likely to rise further, and the Fed is committed to prevent lending problems. He added the market tends to self-correct over time and subprime mortgage market has adjusting sharply. US Treasury Secretary Henry Paulson said the Fed’s move help stabilize market credit crunch.

The dollar extended its loss after London’s Daily Telegraph newspaper cited that Saudi Arabia did not lower its interest rates in line with the Fed, though King Abdullah’s advisor said the country will not unpeg its currency from the dollar in the near future.
CAD Reached Parity with USD

The Canadian dollar rallied sharply on rising commodity prices. Crude oil surged to 83.46 dollars per barrel today. The currency equaled the dollar for the first time since November 1976. The market will pay attention to Canada retail sales report due tomorrow. Canada retail sales are expected to remain unchanged in July, after a 0.9% drop in June. Excluding food and energy, core retail sales may rose 0.3% versus a 0.3% decline in the previous month.

EURUSD will face interim resistance at 1.40, followed by 1.4020 and 1.4050. Additional ceilings will emerge at 1.4080, backed by 1.41. Support starts at 1.3950, backed by 1.3930, 1.39 and 1.3880. Subsequent floors are eyed at 1.3850.

USDJPY encounters interim resistance at 114.70, backed by 115 and 115.30. Subsequent ceilings will emerge at 115.50, followed by 115.80 and 116. On the downside, support begins at 114.30 and 114, followed by 113.80. Additional floors are eyed at 113.50, backed by 113 and 112.70.

GBPUSD encounters interim resistance at 2.01, backed by 2.0130 and 2.0170. Subsequent ceilings will emerge at 2.02, followed by 2.0220 and 2.0250. On the downside, support begins at 2.0050, followed by 2 and 1.9970. Additional floors are eyed at 1.9930, backed by 1.99 and 1.9870.

FX Rangebound by Korman Tam

2007-09-21T15:08:00.000+07:00

At 4:30 AM UK August Retail Sales m/m (exp 0.1%, prev 0.7%)
UK August Retail Sales y/y (exp 4.0%, prev 4.4%)
At 8:30 AM US Weekly Jobless Claims (exp 321k, prev 319k)j
At 10:00 AM US August Leading Indicators (exp -0.2%, prev 0.4%)
At 12:00 PMUS September Philadelphia Fed Survey (exp 2.3, prev 0.0)

The greenback holds steady against the majors heading into the Thursday session, continuing to recover following the post-FOMC selloff. The dollar is trading just beneath the 1.40-barrier against the euro and near 2.0020 versus the sterling. We expect the 50-basis point Fed rate cut to weigh on the greenback over the coming weeks and foresee the currency to tumble to fresh lows against the euro and fall closer toward parity versus the Canadian dollar.

Economic data from the US in the coming session will include weekly jobless claims, August leading indicators and the September Philadelphia Fed survey. Weekly jobless claims are estimated to edge up slightly to 321k, from 319k from the previous week. August leading indicators are seen falling by 0.2%, compared with a 0.4% increase from July. Meanwhile, the Philadelphia Fed survey is forecasted to improve to 2.3 for September, up from a flat reading in August.

Currency traders will focus closely on global equity bourses amid the increase in risk taking following the Fed rate cut. Any fresh revelations of deteriorating banks’ balance sheets or tightening credit conditions would likely prompt a renewed sell-off in equities, and subsequently a sharp pull back in the yen carry trades. Despite the Fed’s aggressive policy easing, the US economy remains in a precarious state – amid heightened fears of a recession due to the slumping housing market.
Sterling Hovers Above 2

Cable holds steady near 2.0020 ahead of UK retail sales later in the session. The retail sales report is seen falling to 0.1%, from 0.7% in the previous month, while the annualized figure is forecasted to fall to 4.0%, versus 4.7% a year earlier.

GBPUSD encounters interim resistance at 2.0030, backed by 2.0070 and 2.01. Subsequent ceilings will emerge at 2.0140, followed by 2.0170 and 2.02. On the downside, support begins at 2, followed by 1.9980 and 1.9950. Additional floors are eyed at 1.9930, backed by 1.99 and 1.9870.

Dollar Recovered From Fed Rate Cut by Yan Xu

2007-09-20T05:16:00.000+07:00

The dollar today pared its loss from the Fed’s aggressive rate cut as investors believe the rate cut will help the US economy. The currency fell sharply yesterday after the Fed slashed interest rates by 50 basis points yesterday.

US equities gained further today with the Dow Jones Industrial Average rose 76.17 to 13,815.56 and the Standard & Poor’s 500 index rose 9.25 to 1529.03 at 4:15 pm. The rally in stock market stimulates carry trades modestly. The yen weakened to above the 116 level against the dollar.

The euro failed to extend beyond the record high at 1.3687 set on as traders sold the euros to protect option bets at 1.40 against the dollar. The pair consolidates in range between 1.3940 and 1.3987.

Earlier in the US session, a bunch of inflation and housing reports came out weaker than expected, supporting the rate cut yesterday. US CPI declined 0.1% in August, below the estimate of an unchanged reading. Excluding food and energy, core CPI rose 0.1%, less than the estimate of 0.2%. US housing starts dropped 2.6% to an annual rate of 1.33 million units in August, while building permits fell 5.9% to 1.307 million units.

Tomorrow will see US weekly jobless claims, August leading indicators, and September Philadelphia Fed index.

The sterling was still under pressure from the liquidity problem in UK banking system due to subprime issue. After Northern Rock was bailed out last week, the Bank of England announced today to allow commercial banks to use mortgages as collateral to borrow via three-month repos. The sterling fell off the high at 2.0172 set Tuesday to the key level at 2 versus the dollar.

EURUSD will face interim resistance at 1.40, followed by 1.4020 and 1.4050. Additional ceilings will emerge at 1.4080, backed by 1.41. Support starts at 1.3950, backed by 1.3930, 1.39 and 1.3880. Subsequent floors are eyed at 1.3850.

USDJPY encounters interim resistance at 116.30, backed by 116.50 and 116.80. Subsequent ceilings will emerge at 117, followed by 117.30 and 117.50. On the downside, support begins at 116 and 115.70, followed by 115.50. Additional floors are eyed at 115.30, backed by 115 and 114.70.

GBPUSD encounters interim resistance at 2.0030, backed by 2.0070 and 2.01. Subsequent ceilings will emerge at 2.0140, followed by 2.0170 and 2.02. On the downside, support begins at 2, followed by 1.9980 and 1.9950. Additional floors are eyed at 1.9930, backed by 1.99 and 1.9870.

Free Signal Today 19 Sept2007

2007-09-19T15:04:00.000+07:00

SELL LIMIT GBP/USD AT 2.0117
TAKE PROFIT 2.0067 & STOP LOSS 2.0167
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME

SELL LIMIT GBP/JPY AT 233.20
TAKE PROFIT I 232.40 & STOP LOSS 234.20
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME
Happy Trading!

Free Signal Today!

2007-09-19T11:37:00.000+07:00

GJ 18 september 2007

SELL GJ : 228.84
STOP LOSS : 230.77
TP : 227.78

FX Awaits Data, FOMC by Korman Tam

2007-09-19T11:36:00.000+07:00

At 4:30 AM UK August CPI m/m (exp 0.4%, prev -0.6%)
UK August CPI y/y (exp 1.9%, prev 1.9%)
UK August RPI m/m (exp 0.4%, prev -0.6%)
UK August RPI y/y (exp 4.0%, prev 3.8%)
UK August RPI-x m/m (exp 0.3%, prev -0.6%)
At 5:00 AM Germany September ZEW Current Conditions (exp 75.0, prev 80.2)
Germany September ZEW index (exp -15.5, prev -6.9)
At 8:30 AM US August core PPI m/m (exp 0.1%, prev 0.1%)
At 9:00 AM US July TICS (exp $85.0 bln, prev $120.9 bln)
At 1:00 PM US September NAHB (exp 20.0, prev 22.0)
At 2:15 PM FOMC Policy Decision (exp 5.00%, prev 5.25%)

The major currency pairs will likely remain locked in range ahead of Tuesday’s highly anticipated FOMC monetary policy announcement, slated for 2:15 PM. Although the Fed meeting will garner the lion’s share of market attention, there will also be several key data releases that should impact central bank monetary policy decisions, namely the Bank of England and the European Central Bank.

The data include inflationary reports from the UK, consisting of the consumer price index and retail price index and from the Eurozone, the Germany ZEW sentiment survey. The ECB is expected to lift rates by 25-basis points over the remainder of the year, while the rate outlook for the BoE is less certain. There is now increased speculation that the next move from the Bank of England would be a rate cut given fears about the impact from the subprime mortgage fallout on UK banks.

The sterling remains pressured against the greenback and yen following yesterday’s news of the UK’s Northern Rock bank. The news fuelled fears of large subprime exposure among other UK banks, raising expectations that the BoE may soon ease its bench-mark lending rate. In the session ahead, UK CPI data is seen up 0.4% in August, versus a 0.6% decline in the previous month, while the annualized figure is expected to remain unchanged at 1.9% -- beneath the BoE’s 2% inflation target. The retail price index is estimated to edge up to 4.0% versus 3.8% from the previous year and seen reversing the prior month’s 0.6% decline to edge higher by 0.4%.

The key highlight will be the FOMC’s monetary policy announcement, in which a 25-basis point rate cut to 5.0% is largely anticipated. It is worth noting that Fed Board members have delivered conflicting messages, with some maintaining their mantra of keeping inflationary pressure in check. It will be interesting to see whether the Fed responds to market calls for a cut while concurrently tempering inexorable expectations for further easing over the coming months. If a 25-basis point reduction does materialize, Bernanke will likely perform a balancing act between quelling burgeoning recessionary fears and containing runaway expectations for a series of rate cuts – given lingering concerns from Board members about inflation.

Market Focus Shifts to FOMC by Korman Tam

2007-09-19T11:34:00.000+07:00

Japan’s Market Closed for Holiday
At 5:00 AM Eurozone July Trade Balance (exp 6.8 bln euros, prev 7.8 bln euros)
At 8:30 AM US September NY Fed Manufacturing (exp 18.0, prev 25.06)

The greenback remains mixed against the majors, mired near all-time lows versus the euro around 1.3865 but firmer against the yen and the sterling. The week will kick off to a slow start with the Japanese market closed in observance of the Respect for the Elderly Day holiday. The primary focus among traders will be the FOMC monetary policy meeting on Tuesday, in which market participants are anticipating a 25-basis point rate cut to 5.00%.

While an FOMC rate cut this week is not a foregone conclusion, recent deterioration in US economic fundamentals have raised speculation that the Fed will need to preempt a potential recession by easing policy to stimulate the economy. However, board members have delivered conflicting messages, with some maintaining their mantra of keeping inflationary pressure in check. It will be interesting to see whether the Fed responds to market calls for a cut while concurrently tempering inexorable expectations for further easing over the coming months. If a 25-basis point reduction does materialize on Tuesday, Bernanke will likely perform a balancing act between quelling burgeoning recessionary fears and containing runaway expectations for a series of rate cuts – given lingering concerns from Board members about inflation.

Recent price action in the currency market suggests traders have priced in a 25-basis point rate reduction this Tuesday, which increases the significance of the Fed’s subsequent statement and any post-meeting comments from FOMC Board members. We expect the greenback to remain under pressure over the coming months given the state of the US housing market and the subprime mortgage meltdown. In the week ahead, US economic reports will include the September NY Fed manufacturing survey, August CPI, PPI, July TICS, September NAHB, building permits and the Philadelphia Fed survey. It will also be important to focus on earnings reports from major financial firms that will be releasing this week to assess the full impact of the subprime debacle on their balance sheets.

Former Fed Chairman Greenspan was quoted in the FT as saying the US housing price declines will be more significant than most expect. He said he would not be surprised if US house price declines extended into double digits. However, he cautioned against cutting rates too aggressively for fear of an “inflationary resurgence”, which are greater now than when he was Chairman. Greenspan also added that the negative wealth effect from the housing slump results in a crisis that is “trickier” to control.

Dollar Slumped after Fed Cut 50 bps by Yan Xu

2007-09-19T04:35:00.000+07:00

The dollar slumped across the board after the Fed cut federal funds rate half a percentage point to 4.75%. The unanimous decision surprised the majority of the market who had expected a rate cut of only 25 basis points.

Against the dollar, the euro broke the 1.39 handle easily and rose up to an all-time high at 1.3980. The dollar dropped 50 pips instantly to 115.25 versus the yen after the FOMC announcement. The rate cut fueled the stock rally and also gold surged to a 28-year high on that.

The FOMC statement showed the rate cut is designed to forestall adverse economic effects. The Fed will continue to monitor effects and act as needed. It also stated that readings on core inflation have modest improvement and tightening of credit conditions may intensify housing correction.

Earlier in the session, US PPI, an inflation gauge, unexpectedly declined 1.4% in August, the largest drop since October 2006. This added to the expectation of a Fed rate cut. Excluding food and energy, core index rose 0.2%. US TICS data showed net long-term flows excluding swaps, fell from 120.9 billion to 19.2 billion in July, indicating a decline in international demand for US assets. Besides, US September NAHB came out at 20 as expected.

The euro was little changed after a weaker-than-expected Germany ZEW report as the market focus was on the FOMC. The headline declined to minus 18.1 in September, below the estimate of minus 15.5 and a previous reading of minus 6.9. The current conditions dropped from 80.2 to 74.4 as expected.

The European Central Bank Miguel Angel Fernandez Ordonez, a member of ECB governing council, said today there is still a chance that inflation may accelerate.

EURUSD will face interim resistance at 1.40, followed by 1.4020 and 1.4050. Additional ceilings will emerge at 1.4080, backed by 1.41. Support starts at 1.3950, backed by 1.3930, 1.39 and 1.3880. Subsequent floors are eyed at 1.3850.

USDJPY encounters interim resistance at 115.50, backed by 115.80 and 116. Subsequent ceilings will emerge at 116.30, followed by 116.50 and 116.80. On the downside, support begins at 115 and 114.80, followed by 114.50. Additional floors are eyed at 114.30, backed by 114 and 113.70.

GBPUSD encounters interim resistance at 2.0150, backed by 2.0170 and 2.02. Subsequent ceilings will emerge at 2.0230, followed by 2.0250 and 2.0280. On the downside, support begins at 2.01, followed by 2.0070 and 2.0030. Additional floors are eyed at 2, backed by 1.9980 and 1.9950.

Free Signal Today!

2007-09-18T12:50:00.001+07:00

BUY STOP GBP/JPY AT 231.75
TAKE PROFIT 232.35
STOP LOSS 230.75

SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME
Happy Trading!

Free Signal Today!

2007-09-18T12:50:00.000+07:00

BUY LIMIT GBP/USD AT 2.0060
TAKE PROFIT 2.0110
STOP LOSS 2.0010

SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME

Happy Trading!

Dollar Remains Weak, Eyes on FOMC by Yan Xu

2007-09-18T11:36:00.001+07:00

The dollar remains weak against most of its rivals on Monday on expectations that the Fed will cut interest rates by at least a quarter percentage point tomorrow.

The euro hovers above 1.3850 versus the dollar and is very likely to break 1.39 after the FOMC on Tuesday afternoon. The yen is trading in a narrow range between 114.68 and 115.36 against the dollar in today’s trading session.

After recent financial turbulence caused mostly by credit crunch, the Federal Reserve is widely expected to lower its benchmark rates to avoid recession. Some in the market even look for a 50 basis point rate cut. The market will keep range bound until the Fed makes interest rate announcement at 14:15 eastern time tomorrow.

Besides, tomorrow will see Germany ZEW index, UK RPI and CPI, US PPI, TICS and NAHB. Germany ZEW headline is seen down 15.5 in September, compared to a –6.9 reading in the previous month. Germany ZEW current conditions index is expected to fall from 80.2 to 75 in September.

EURUSD will face interim resistance at 1.39, followed by 1.3930 and 1.3950. Additional ceilings will emerge at 1.3980, backed by 1.40. Support starts at 1.3850, backed by 1.3830, 1.38 and 1.3770. Subsequent floors are eyed at 1.3750.

USDJPY encounters interim resistance at 115.50, backed by 115.80 and 116. Subsequent ceilings will emerge at 116.30, followed by 116.50 and 116.80. On the downside, support begins at 115 and 114.80, followed by 114.50. Additional floors are eyed at 114.30, backed by 114 and 113.70.
Sterling Fell Below 2

The sterling extended its loss as this is already the third day that thousands of customers withdrew money from Northern Rock Plc branches across the UK. The Bank of England last Friday provided financial support to this Britain’s fifth largest home mortgage lender to ease its liquidity needs. Subprime is still a problem for the US and European economy. The currency today fell below the major psychological level at 2 versus the dollar.

GBPUSD encounters interim resistance at 1.9980, backed by 2 and 2.0030. Subsequent ceilings will emerge at 2.0060, followed by 2.01 and 2.0150. On the downside, support begins at 1.9920, followed by 1.99 and 1.9870. Additional floors are eyed at 1.9850, backed by 1.9830 and 1.98.

U.S. Stocks Rise, Erasing 2 Weeks of Losses, on Credit Outlook

2007-09-17T00:22:00.001+07:00

By Michael Patterson and Lynn Thomasson

U.S. stocks rose, erasing losses from the last two weeks, on speculation lower borrowing costs and resilient consumer spending will sustain profit growth.

Countrywide Financial Corp., the largest U.S. mortgage lender, snapped a four-week slide after lining up $12 billion of financing. McDonald's Corp., the biggest restaurant company, jumped to a record after posting August sales that beat analysts' estimates and boosting its dividend. General Motors Corp. had its best gain in more than a year as investors speculated automakers will win union concessions on health-care costs.

The Federal Reserve said the decline in the U.S. commercial paper market narrowed last week and Kohlberg Kravis Roberts & Co.'s bankers found buyers for loans to finance its takeover of U.K. pharmacist Alliance Boots, bolstering expectations that debt markets will recover from a summer swoon. Stock prices also rallied as traders bet the Fed will cut interest rates at its Sept. 18 policy meeting.

``Consumer demand looks reasonably strong and there's hope that the problems in the commercial paper and debt markets won't be as bad as first expected,'' said Jerome Dodson, president of Parnassus Investments in San Francisco. ``The economy is going to be pretty well off, so right now I'm reasonably bullish.''

The Standard & Poor's 500 Index climbed 2.1 percent to 1,484.25, bouncing back from two straight weekly declines. The Dow Jones Industrial Average rose 2.5 percent to 13,442.52, the biggest weekly gain since April. The Nasdaq Composite Index added 1.4 percent to 2,602.18.

FOMC Meeting

The Fed's Open Market Committee next week will lower the overnight lending rate between banks to 5 percent from 5.25 percent, according to the median forecast of economists surveyed by Bloomberg News. The reduction would be Fed Chairman Ben S. Bernanke's first and may be followed by at least two more before year-end, federal funds futures suggest.

``This Fed meeting is crucial,'' said Walter ``Bucky'' Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama. ``The stock market has been responding nicely the past few days in anticipation that the Fed will do what it's supposed to do.''

Countrywide climbed 6.6 percent to $19.42. The lender's ability to find new sources of capital ``should substantially address funding concerns,'' a team of Credit Suisse Group analysts wrote. Countrywide last month borrowed $11.5 billion from bank credit lines to help weather a decline in investor demand for mortgages and reduced access to the commercial paper market, where the company usually borrows money.

Investment Banks Rally

Lehman Brothers Holdings Inc., the biggest underwriter of U.S. mortgage bonds, climbed 12 percent to $59.50 for the largest weekly advance since October 2002. Bear Stearns Cos., the No. 2 underwriter, gained 11 percent to $117.19, the biggest rise since September 2001.

Investors snapped up shares of Lehman, Bear Stearns, Morgan Stanley and Goldman Sachs Group Inc. before the investment banks report quarterly earnings next week.

Bank and brokerage stocks have tumbled this year on concern credit market turmoil will hurt earnings from trading and debt underwriting. The S&P 500 Financials Index has dropped 8.7 percent since December for the worst performance among 10 industry groups.

McDonald's added 13 percent to $55.45. August sales advanced 8.1 percent as customers bought chicken snack wraps and iced coffee in the U.S. and McFlurry desserts in Europe. The company also this week boosted its annual dividend by 50 percent as part of a plan to return as much as $17 billion to investors.

GM Advances

GM, the biggest U.S. automaker, increased 16 percent to $34.22 for the top gain in the S&P 500. Citi Investment Research urged investors to buy the shares on the possibility of an agreement with the United Auto Workers on retiree health care.

The stock may climb to $57 a share if GM gets an accord to set up a union-run fund for the medical coverage, Citi analyst Itay Michaeli said.

The Fed reported short-term debt dropped by $8.2 billion last week, compared with a decline of $31.3 billion a week earlier. Debt maturing in 270 days or less fell to a seasonally adjusted $1.92 trillion, including a $21.6 billion decline in asset-backed commercial paper. Commercial paper outstanding has fallen $306.4 billion in five weeks.

Deutsche Bank AG, JPMorgan Chase & Co. and UniCredit SpA, which last month abandoned selling 6 billion pounds ($12 billion) of mostly senior loans to fund the Boots takeover, probably will finish syndicating 750 million pounds of mezzanine debt that ranks last for repayment, two bankers involved said.

KKR's eight underwriters have been saddled with all of the 9 billion pounds of debt backing Europe's biggest leveraged buyout after investors rejected high-risk, high-yield loans.

Buyout Debt Backlog

Banks have committed about $350 billion for leveraged buyouts in the U.S. and 60 billion euros ($83 billion) in Europe that have yet to syndicate, according to UBS estimates. Underwriters agree to provide the financing to private-equity firms when the acquisitions are announced. If market conditions sour, banks are forced to hold debt they can't sell.

Boots spokesman Richard Constant, Deutsche Bank spokesman Richard Thomson and JPMorgan spokeswoman Colette Campbell, all in London, declined to comment.

Energy companies in the S&P 500 advanced 3 percent as a group for the top gain among 10 industries. Oil reached a record this week and closed above $80 a barrel for the first time on Sept. 13 after Hurricane Humberto briefly shut three refineries in Texas. Crude for October delivery closed at $79.10 a barrel in New York yesterday.

Exxon Mobil Corp., the world's biggest energy company, advanced 3.4 percent to $88.67. Chevron Corp., the second-largest U.S. oil producer, increased 3.4 percent to $90.65.

Treasuries fell as traders reduced holdings of the safest debt and bought riskier assets. The yield on the two-year note rose about 0.14 percentage point to 4.05 percent. Bond yields move inversely to prices.

Sterling Hit By Northern Rock Crisis by Yan Xu

2007-09-17T00:09:00.000+07:00

The sterling fell sharply after the Bank of England provide an unspecified amount of financial support to UK¡¯s fourth largest home mortgage lender, Northern Rock, which suffered losses from recent rising lending rates sparked by US subprime crunch. This unusual move reignited worries that credit market problems may hit global economy. The sterling dropped to a 10-day low at 2.0062 versus the dollar.

The dollar was almost flat against the euro and yen on Friday though a soft US retail sales report reinforced speculations on a 50 basis point Fed rate cut next week. US retail sales rose 0.3% in August, below the estimate of 0.4%. Excluding autos, core retail sales dropped 0.4%, worse than the expectation of a 0.2% growth. US import prices declined 0.3% due to lower oil prices in August, while export prices rose 0.2% as expected. Current account deficit came out at 190.79 billion as expected in the second quarter. Industrial production rose 0.2% in August, below the estimate of 0.3%. University of Michigan consumer sentiment index was almost unchanged from previous month at 83.8. Business inventories were up 0.5% in July, beating the estimate of 0.3% and 0.4% a month earlier.

Earlier in US session today, US Treasury Secretary Henry Paulson said in CNBC interview today that credit markets have had some modest improvement. He reiterated that a stronger dollar is in US interest, giving the dollar a knee-jerk boost.

Also worth noting is that ECB Chairman Trichet today made some comments on global economy. He stated that inflation risk in the region remains to the upside, setting stage for a rate rise later in the year. He also said Japanese economy is on recovery path and foreign exchange rate should reflect this, calling for a stronger yen.

EURUSD will face interim resistance at 1.39, followed by 1.3930 and 1.3950. Additional ceilings will emerge at 1.3980, backed by 1.40. Support starts at 1.3850, backed by 1.3830, 1.38 and 1.3770. Subsequent floors are eyed at 1.3750.

GBPUSD encounters interim resistance at 2.01, backed by 2.0130 and 2.0160. Subsequent ceilings will emerge at 2.02, followed by 2.0220 and 2.0250. On the downside, support begins at 2.0060, followed by 2.0030 and 2. Additional floors are eyed at 1.9980, backed by 1.9950 and 1.99.

USDJPY encounters interim resistance at 115.50, backed by 115.80 and 116. Subsequent ceilings will emerge at 116.30, followed by 116.50 and 116.80. On the downside, support begins at 115 and 114.80, followed by 114.50. Additional floors are eyed at 114.30, backed by 114 and 113.70.

SIGNAL FOREX TRADING FOR 14 SEPTEMBER 2007

2007-09-15T13:01:00.000+07:00

BUY STOP GBP/USD AT 2.0180
TAKE PROFIT 2.0240 & STOP LOSS 2.0120
SIGNAL VALID FROM 10.00 AM - 7.00 PM TRADING TIME

BUY STOP GBP/JPY AT 231.50
TAKE PROFIT I 232.50 & STOP LOSS 230.00
TAKE PROFIT II 233.35 & STOP LOSS 230.00
TAKE PROFIT III 234.20 & STOP LOSS 230.00
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME

Happy Trading!
Status Signal for 13 September :Profit

Dollar Extended Loss, Eyes on Retail Sales by Yan Xu

2007-09-14T13:09:00.001+07:00

The dollar continues to weaken across the board on expectation that the Fed will cut interest rates by half a percentage point next week. The euro today hovers above 1.3860 and set a record high at 1.3927 versus the dollar. The sterling climbed above 2.03 to test a resistance at 2.0350 against the dollar.

The main focus of the market is still on the US economy. Last Friday‘s weak US non-farm payrolls surprised the market and indicated the impact of credit crunch may spread into every aspect of the nation¡¯s economy. It is widely expected that the Fed may need to lower its benchmark rates on September 18 policy meeting to avoid recession.

The dollar was little changed after US weekly jobless claims came out at 319k, slightly better than the estimate of 325k. Tomorrow will see a bunch of economic data, including Germany August CPI, euro-zone August HICP, Canada July manufacturing shipments, Canada Q2 labor production rate, US retail sales, US import and export prices, US Q2 current account balance, US industrial production, US August Capacity utilization, and University of Michigan consumer sentiment index. US retail sales are seen growing 0.4% in August, versus a 0.3% rise earlier. Excluding autos, core retail sales are expected to rise 0.2%, down from a 0.4% reading in the previous month.

The resignation of Japanese Prime Minister Shinzo Abe and the speculation that the government may downgrade its economic assessment put pressure on the yen. The yen pared its gains versus the euro and sterling. The dollar bounced up to test 115.50 versus the yen.

The swiss franc was little changed after the Swiss National Bank unexpectedly raised interest rates by 25 basis points to 2.75% on Thursday.

As a commodity currency, the Canadian dollar rallied on rising oil prices. It rose to a 30-year peak at 1.0314 against the dollar.

EURUSD will face interim resistance at 1.3920, followed by 1.3950 and 1.3980. Additional ceilings will emerge at 1.40, backed by 1.4020. Support starts at 1.3880, backed by 1.3850, 1.3830 and 1.38. Subsequent floors are eyed at 1.3770.

GBPUSD encounters interim resistance at 2.03, backed by 2.0320 and 2.0350. Subsequent ceilings will emerge at 2.0380, followed by 2.04 and 2.0450. On the downside, support begins at 2.0280, followed by 2.0250 and 2.0220. Additional floors are eyed at 2.02, backed by 2.0180 and 2.0150.

FREE SIGNAL FOR 13 SEP 2007

2007-09-14T10:30:00.000+07:00

BUY GJ : 231.77
STOP LOSS : 229.54
TP 1 : 232.43
TP 2 : 232.90
TP 3 : 233.67
BUY STOP GBP/USD AT 2.0292
TAKE PROFIT 2.0342 & STOP LOSS 2.0192
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME
Happy Trading!

USD Mired Near Record Lows by Korman Tam

2007-09-14T10:25:00.000+07:00

At 8:30 AM Canada Q2 Current Account Balance (exp 83.2%, prev 83.0%)
US Weekly Jobless Claims (exp 325k, prev 318k)
At 10:00 AM US August Federal Budget

The dollar is mired near its lows against the euro amid heightened fears of accelerated deterioration in US economic fundamentals, to the extent of a recession. Markets are largely expecting the FOMC to jumpstart the economy with at least a 25-basis point rate cut when it deliberates policy next week. However, a shift in policy is not a foregone conclusion in light of recent conflicting comments from Fed officials, in which some reiterated lingering inflationary concerns.

In the session ahead, the US economic calendar is light with the release of weekly jobless claims and the August federal budget. The key reports will be released on Friday, consisting of August retail sales, Q2 current account balance, industrial production, capacity utilization, business inventories and the University of Michigan sentiment survey. The retail sales report will bear additional significance since it will be the last piece of consumer spending data the Fed will see before its policy setting meeting next week.
Euro Buoyed Near All-Time Highs

The euro remains favored as it hovers near its all-time highs just under the 1.39-figure. Although it remains unclear whether the ECB will continue its tightening cycle in the face of recent financial market turmoil, the Bank is largely expected to raise rates by 25-basis points by year-end to lift its benchmark lending rate to 4.25%. We expect the single currency to remain supported over the coming weeks, with an interim target of 1.40.

EURUSD holds steady near 1.39, with ceilings seen at 1.3920, followed by 1.3950 and 1.40. Support begins at 1.3860, backed by 1.3830 and 1.38.

Yen Mixed

The yen fell against the dollar while edging up higher versus the euro and sterling. Japan’s Prime Minister Abe resigned from his post amid a series of scandals and a poll defeat. However, the abrupt announcement had little impact on the currency market.

USDJPY trades near 114.30, with interim resistance starting at 114.60, followed by 115 and 115.50. Additional ceilings are seen at 115.75 and 116. Support starts at 114, followed by 113.70 and 113.40. Subsequent floors are eyed at 113, followed by 112.50 and 112.

Dollar Broke 1.39 vs Euro by Yan Xu

2007-09-13T10:16:00.000+07:00

The dollar broke the 1.39 handle against the euro on Wednesday on raising concerns about US economy and the Fed outlook. The sterling rose to as high as 2.03 versus the dollar.

The market focus has shifted from general risks aversion to US-economy related risk aversion. Last Friday¡¯s unexpectedly weak non-farm payrolls added to the worries about the US economy. It is still hard to measure how much impact the subprime and credit market crunch may have on the broad economy. The Fed needs to cut interest rates to avoid economic recession. The market has fully priced in an interest rate cut by the Fed on September 18 meeting. Most in the market has a bearish sentiment over the greenback.
The Fed is the only central bank that is going to lower the rates, while the ECB and BOE are expected to raise interest rates by at least once this year.

ECB Governing Council member Victor Constancio said on Wednesday that the central bank are keeping all options open, reinforcing expectations for a rate hike by the year-end.

Besides, oil set a record intraday high at 78.84 per barrel today, pushing the dollar down futher.

Tomorrow will see US weekly jobless claims, which is expected to increase from 318k to 325k.

EURUSD will face interim resistance at 1.3920, followed by 1.3950 and 1.3980. Additional ceilings will emerge at 1.40, backed by 1.4020. Support starts at 1.3880, backed by 1.3850, 1.3830 and 1.38. Subsequent floors are eyed at 1.3770.

GBPUSD encounters interim resistance at 2.03, backed by 2.0320 and 2.0350. Subsequent ceilings will emerge at 2.0380, followed by 2.04 and 2.0450. On the downside, support begins at 2.0280, followed by 2.0250 and 2.0220. Additional floors are eyed at 2.02, backed by 2.0180 and 2.0150.

USDJPY encounters interim resistance at 114.50, backed by 114.80 and 115. Subsequent ceilings will emerge at 115.30, followed by 115.50 and 115.80. On the downside, support begins at 114 and 113.80, followed by 113.50. Additional floors are eyed at 113.30, backed by 113 and 112.70.

FREE SIGNAL FOR 12 SEP 2007

2007-09-13T09:40:00.000+07:00

BUY STOP GBP/JPY AT 231.55
TAKE PROFIT 232.55
STOP LOSS 230.55

BUY STOP GBP/USD AT 2.0303
TAKE PROFIT 2.0363
STOP LOSS 2.0223

SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

Happy Nice Trading!

Dollar Weakens on Rate Cut Expectation by Yan Xu

2007-09-13T09:12:00.000+07:00

The dollar fell to a record low at 1.3847 versus the euro on expectation that the Fed may cut interest rates on its September 18 policy meeting.

Several Federal Reserve officials yesterday expressed their concerns on the credit crunch and its impact on the broader economy, reinforcing expectations for a half percentage point cut instead of a quarter percentage point cut as anticipated earlier. Fed Chairman Ben Bernanke said in Berlin that the ¡°global saving glut¡± is still helping to keep interest rates low. Fed Governor Frederic Mishkin said there is an important downside risk to the US economy. San Francisco Fed President Janet Yellen said that losses related to credit market may slow growth.

Interest-rate futures pricing showed traders see a 68 percent chance that the Fed will cut interest rates by half a percentage point to 4.75 percent on its policy meeting on September 18.

US international trade deficit increased from 58.14 billion to 59.25 billion in July as expected. Tomorrow has no major economic data due from US. The market will focus on the retail sales report, current account deficit, industrial production capacity utilization, and University of Michigan consumer sentiment report on Friday.

ECB President Trichet said that credit losses in the euro-zone were not big enough to weaken financial institutions. He reiterated that inflation risks remain on the upside, raising expectations that the central bank may lift interest rates at least once this year.

The loonie strengthened against the dollar after a run of better-than-expected housing data. Canada housing starts increased from 215.6k to 226.5k in August, beating the estimate of 220k. New housing price index rose 0.9% in July, above the expectation of 0.6%.

EURUSD will face interim resistance at 1.3850, followed by 1.3870 and 1.39. Additional ceilings will emerge at 1.3930, backed by 1.3950. Support starts at 1.38, backed by 1.3780, 1.3750 and 1.3730. Subsequent floors are eyed at 1.37.

GBPUSD encounters interim resistance at 2.0350, backed by 2.0380 and 2.04. Subsequent ceilings will emerge at 2.0420, followed by 2.0450 and 2.0480. On the downside, support begins at 2.03, followed by 2.0280 and 2.0250. Additional floors are eyed at 2.0220, backed by 2.02 and 2.0180.

USDJPY encounters interim resistance at 114.50, backed by 114.80 and 115. Subsequent ceilings will emerge at 115.30, followed by 115.50 and 115.80. On the downside, support begins at 114 and 113.80, followed by 113.50. Additional floors are eyed at 113.30, backed by 113 and 112.70.

Yen Edges Higher on Data

2007-09-13T09:11:00.000+07:00

The yen crept higher against the dollar in early Tokyo trading, edging up to 113.40 upon the release of a sharply higher than expected Japan machinery orders report. The core July machinery orders shot up by 17% m/m, far outpacing estimates for a 5.0% rise. The annualized core machinery orders also defied calls for a 2.0% decline, instead climbing by 8.0%.

Meanwhile, Japan’s economics minister Ota said he does not see a large change in Japanese economic conditions. He also expressed caution on whether the US economy can make a soft landing. Finance Minister Nukaga said he expects the BoJ to set appropriate policy with an eye on the global economy and market moves.

FX Awaits Data, Bernanke by Korman Tam

2007-09-12T09:09:00.000+07:00

At 4:00 AM Germany August WPI m/m (exp n/f, prev 0.4%)
Germany August WPI y/y (exp n/f, prev 2.6%)
At 4:30 AM UK July Trade Balance (exp –6.4 bln stg, prev –6.3 bln stg)
At 8:15 AM` Canada August Housing Starts (exp 220k units, prev 215.6k units)
At 8:30 AM Canada July New Housing Price Index (exp 0.6%, prev 0.7%)
US July Trade Deficit (exp $59 bln, prev 58.14 bln)
Canada July Trade Surplus (exp C$5.0 bln, prev C$ 5.3 bln)

The currency market remains biased for a softer dollar amid a dearth of US economic data at the start of the week – with commentary from Federal Reserve members garnering the lion’s share of traders’ attention. Ahead of the blackout period before next week’s FOMC meeting, a barrage of comments from Fed speakers revealed mixed sentiment among its members providing little insight into the coming deliberations. However, market participants are largely anticipating a 25-basis point cut in the Fed funds rate with some even calling for a preemptive 50-basis point reduction to jumpstart the economy and stave off potential recession.

Earlier in the session, Fed governor Mishkin sounded a dovish tone in his commentary, saying that risks to the inflation outlook is now more balanced given the greater downside risks to growth. He added that the Fed must remain vigilant on inflation, but it also needs to be attentive to keeping demand from falling beneath supply as well. His comments echo a similar tone to Lockhart’s and Yellen’s, who both suggested that policy should incorporate the recent downturn in US economic fundamentals. Lockhart said the recent payrolls number is very important and must be taken very seriously. Moreover, he said another key piece of economic data that will play a particularly key role in policy deliberations is consumer-spending data. This week’s retail sales report on Friday will bear additional significance since it will be the last piece of key data before the Fed’s meeting. Furthermore, Fed Chairman Bernanke’s comments on Tuesday will be closely scrutinized, who is scheduled to speak at the Bundesbank at 11:00 am.

Economic data from the US will see the July trade deficit, which is expected to creep higher to $59 billion, up from June at $58.14 billion.

Free Signal Today 11 September 2007

2007-09-11T12:01:00.000+07:00

BUY STOP GBP/USD AT 2.0268
TAKE PROFIT 2.0348
STOP LOSS 2.0218

SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

BUY STOP GBP/JPY AT 230.20
TAKE PROFIT 231.20
STOP LOSS 229.20

SIGNAL VALID FROM 10.30 AM - 6.30 PM TRADING TIME

Lets trade now!

Yen Strengthens Despite Soft Data by Korman Tam

2007-09-10T22:17:00.001+07:00

The yen pushed higher against the greenback, firming to 112.62 and advancing versus the euro toward 155.19. Heightened risk aversion continues to benefit the Japanese currency amid growing worries of a US recession following last week’s dismal labor report. The yen is seen maintaining its stance as a safe haven currency and inversely track equity performances.
Economic data released earlier revealed softer-than-forecast GDP growth for Q2 in Japan, which shrunk by 0.3% q/q and by 1.2% y/y. The weak growth reports raise fears that the US economic slowdown may be taking its toll on Japan’s export driven economy. The Q2 revised capital expenditures reading was better than estimates, albeit down by 1.2% versus calls for a 1.8% decline.

USDJPY holds steady beneath the 113-level, with support beginning at 112.60, followed by 112.30 and 112. Subsequent floors will emerge at 111.60, followed by 111.20 and 111. Resistance begins at 113, backed by 113.30 and 113.75. Additional ceilings will emerge at 114, followed by 114.50 and 115.

USD Mired in Weakness by Korman Tam

2007-09-10T22:16:00.001+07:00

t 4:30 AM UK August core PPI m/m (exp 0.2%, prev 0.2%)
UK August core PPI y/y (exp 2.4%, prev 2.2%)
At 2:00 PM US July Consumer Credit (exp $8.0 bln, prev $13.1 bln)

The greenback kicks off the week on softer footing, still reeling from the unexpectedly disappointing August jobs data -- which saw non-farm payrolls drop by 4k. With the FOMC policy meeting a little over one week away, the dollar will remain pressured amid expectations for a Fed rate cut in the face of deteriorating US economic fundamentals.

Data slated for release from the US include July consumer credit, trade balance, August retail sales, industrial production, capacity utilization, University of Michigan sentiment survey and July business inventories. Particular focus will be on the retail sales figures as a gauge on how resilient the US consumer is in the face of the recent financial market volatility and mortgage market turmoil.

The calendar for the session ahead is light, with the release of UK August PPI and core PPI. The core PPI figures are seen largely unchanged at 0.2% m/m and the annualized figure up slightly to 2.4%

FREE SIGNAL FOR 10 September 2007

2007-09-10T10:43:00.001+07:00

BUY STOP GBP/USD AT 2.0324
TAKE PROFIT 2.0384 & STOP LOSS 2.0264
SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

BUY STOP GBP/JPY AT 230.15
TAKE PROFIT 231.75 & STOP LOSS 228.65
SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

NB : All of risk not my own but i hope we can profit together!

Five Fibonacci Tricks

2007-09-09T22:41:00.000+07:00

by Alan Farley

Fibonacci jumped into the technical mainstream late in the bull market. Futures traders had it all to themselves until real-time software ported it over to the equity markets. Its popularity exploded as retail traders experimented with its arcane math and discovered its many virtues.

Fibonacci ratios describe the interaction between trend and countertrend markets -- 38%, 50% and 62% retracements form the primary pullback levels. Apply these percentages after a trend in either direction to predict the extent of the countertrend swing. Stretch a grid over the most obvious up or down wave, and see how percentages cross key price levels.

Convergence between pattern and retracement can point to excellent trading opportunities. Keep in mind that retracements work poorly in a vacuum. Always examine highs, lows and moving averages to confirm the importance of a specific level.

Discord between retracement and the underlying pattern generates noise instead of profit. Move on to a new chart when nothing lines up correctly. This divergence generates most of the whipsaw in a price chart. Alternatively, strong phasing between Fibonacci and pattern exposes highly predictive reversals at narrow price levels.

Let's look at five tricks to improve your Fibonacci skills. Add these twists and turns to your toolbox and apply them to your next trade. I promise they'll serve you very well in the years ahead.

First Rise/First Failure

First Rise/First Failure marks the first 100% retracement of a trend within your time frame of interest. It provides an early reversal warning after a new high or low. The 100% retracement violates the major price direction and terminates the trend it corrects. From this level, the old trend can reestablish itself if it breaks through the old 38% level. More often, traders will use that level to enter low-risk positions against the old trend.

Parabola Hunt

Parabolic movement tends to occur between the 0%-to-38% and 62%-to-100% Fibonacci levels in all trends. This tendency offers a great tool for finding the big moves when looking for trades. Watch for congestion to form at the 38% or 62% level. Then use a simple breakout or breakdown strategy when price moves past it. The next thrust can be dramatic, with price moving like a magnet back to an old high or low. Of course, the strategy only works when you can find these levels in advance.

Continuation Gap Extensions

You can often target the exact price a rally or selloff will end at by using the continuation gap as a Fibonacci extension tool. Identify the gap by its location at the dead center of a vertical price wave. Then start a Fib grid at the beginning of the trend and extend it so the gap sits under the 50% retracement level. The grid extension points to the terminating price for the rally or selloff.

Overnight Grids

Find an active stock and start a grid from the high (or low) of a session's last hour. Stretch the grid to the opposite end of the next morning's first hour low (or high). This defines a specific price wave traders can use to uncover intraday reversals, breakouts and breakdowns. The overnight grid also offers a way to trade morning gaps. The gap will often stretch across a key retracement level and target low-risk entry on a pullback.

Second High/Low

Many traders can't figure out where to start a Fib grid. Here's a trick to help you place it where it'll do the most good. The absolute high or low in a price wave isn't the best starting point for a grid most of the time. Instead, look for a small double bottom or double top within the congestion where the trend began. Swing one end of the grid over this second high (or low), instead of the first. This will capture a specific Elliott Wave that conforms to the trend you're trying to trade.

Fibonacci Trading

2007-09-09T22:38:00.000+07:00

Leonardo Pisano, better known by his nickname, Fibonacci, was an Italian mathematician born in Pisa in the 12th century. He is known to have discovered the Fibonacci numbers, said to be based upon observations of the Great Pyramid of Gizeh in Egypt. Fibonacci Numbers are a sequence of numbers where each successive number is the sum of the two previous numbers.

e.g. 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.

It is the ratio of the Fibonacci sequence that is significant, rather than the actual numbers in the sequence. The quotient of the adjacent terms in the series possesses an amazing proportion, roughly 1.618, or its inverse 0.618. This proportion is known by many names: the golden ratio, the golden mean, PHI, and the divine proportion. The dimensional properties that adhere to the ratio of 1.618 occur repeatedly in nature. Examples are as various as mollusk shells and the shapes of gallaxies containing billions of stars.

When used in technical analysis, the golden ratio is most often translated into three percentages: – 38.2%, 50%, and 61.8%. However, other multiples can be used, such as 23.6%, 161.8%, 423%, and so on. The Fibonacci sequence is applied to finance in several ways: retracements, extensions, arcs, fans, and time zones.