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December 6, 2007
Cara's Daily Report and Commentary, Thurs., Dec 6, 2007
Markets Re-cap
The Bulls seemed to like the jobs data and indications of another Fed cut next week. The DJIA (+196.23), S&P 500 (+22.22), and Nasdaq Composite (+46.53) rocketed higher, with energy and technology stocks providing the boost.
The ADP/Macroeconomic Advisors Employment Estimate surprised with private jobs seen to be tripling analysts’ expectations. The data suggests a +189,000 private sector jobs for November. Also, 3Q non-farm business productivity apparently has soared to an annualized +6.3 pct rate between July and September, while unit labor costs may have fallen -2 pct.
According to the Mortgage Bankers Association, mortgage applications surged +22.5 pct last week.
Fannie Mae (FNM) said it plans to issue $7 billion in non-convertible preferred stock in addition to cutting its quarterly dividend by -30 pct.
Giant mining holding company Xstrata launched a A$960 million bid for coal miner Resource Pacific Holdings.
After gasoline and distillate inventories increased, according to the US Department of Energy, Crude Oil prices dropped a bit.
This morning, the Bank of England and the European Central Bank reported on monetary policy. A week from now at 2:15 pm ET Dec 11 in Washington, the Federal Open Market Committee (FOMC) will report.
As expected there was a Rate Cut in England, as there was in Canada on Tuesday, and will likely be in Washington next Tuesday. Here is the Econoday summary:
The Bank of England lowered its key interest rate by 25 basis points to 5.5 percent this morning. Its rate remains the highest among G7 countries. Although third quarter growth was robust, recent data have indicated that the economy may be slowing faster than anticipated as a combination of past rate increases take hold and the global credit crunch shows signs of impacting key sectors of the economy. In cutting its rate, the monetary policy committee decided the risks of slowing economic activity outweighed those of increasing inflationary pressures. The Bank has an inflation target of 2 percent and consumer price inflation was above that level in October. Most analysts thought the MPC would wait for firmer evidence of a slowdown, but recent survey data indicated that the important service sector was softening and house prices were declining. By cutting rates, the MPC is trying to preempt a sharp slowdown in output growth rather than focusing higher oil and fuel prices.
The European Central Bank, however, decided to keep official rates in the 13-country euro currency zone on hold, ie, for a seventh straight month and at a six-year high of 4.0 pct.
That should normally boost the Euro and gold prices, which are denominated in $USD, and the price of Gold did spike +3.00 and Silver +0.11 on the news even though Bloomberg had reported that 100 pct of economists in Europe had predicted the non-move in rates.
But, for the bigger picture this morning, spot Gold is down to 789 and 14.05 (8:08am). The $USD has rallied to 76.732, which is keeping the Precious Metals prices down.
The $USD is up strongly at 76.006. Treasury prices are down a bit, and yields up (7:43am ET). In the past 45 minutes, with the ECB announcement, the $USD softened a bit, but not by much.
Dec DJIA futures are quiet, up +14 to 13470 at 8:21am.
Comments & Outlook
Confusion reigns in capital markets.
Economic data, as reported to us, is going from bad to worse, the interest rate market is thoroughly roiled as the HB&B Super SIV Fund is collapsing (nobody wants asset-backed commercial paper that have no asset backing), the Moody’s rating agency warns re potential insolvency of bond insurers such as MBIA (MBI), and the President and Treasury Secretary are about to hatch the most idiotic financial plan of all time. Yet equities rally.
Anybody could sense the pre-open desperation in the air yesterday as markets in Asia and Europe traded higher, and promoters for America were out in full force (Administration, Fed Heads, Corporate Heads, HB&B) pulling on the same chain.
Watching the equity futures lift off amidst the nonsense, I decided to catch the usually splendiferous opening commentary (NOT !!) of CNBC anchor Mark Haines. But... But... But... Was this a spiritual awakening? Did I actually hear the rotundly anchor spit the words, “I don’t get it. This is up but that is also up. That is down but this is also down. Doesn’t make any sense...” or something to that effect.
Yes, confusion reigns.
What else can I say. That’s what happens when the capital market players realize this is really a game of musical chairs they are playing, and they stand as one to boo the fat lady for joining the party.
Let the central bankers of Europe have their say today and then re-load. Surely they are not going to rain on the President’s parade on the occasion of the Great Mortgage Plan of December 6, 2007. I suppose one could say that a day later and 66 years ago, America faced an attack of similar proportions, not understanding on that sad day the full implications.
Over the years, I have heard some ridiculous political speeches, but the ones coming out of both Parties in Washington with respect to this mortgage boondoggle takes the cake. We are watching history in the making. This isn’t a conflict between the Allies and the Axis Powers. This one, folks, is a War Upon Ourselves.
I do agree that every time that central bankers drop rates, there is a subsequent boost to equity prices -- for a while. And then those prices sag as the reality sets in as to why there was a rate cut in the first place.
Moreover, it is usually the case, that with each rate cut, there is less impact on the market. I think we are going to witness that happen here too.
I will repeat the reality in case you didn’t catch yesterday’s commentary here: The economy in North America and Europe is fragile. The solvency of many financial institutions is also in question. Costs to the US business sector and consumer are quickly rising (CPE price index moving from +1.7 pct in 3Q07 to +2.5 pct in 4Q07) because of the US authorities policy on the $USD, which was to let it fall by lowering the Bank Rate and the Discount Rate of the Fed and maintaining high budgetary spending levels and the resultant high capital raise-ups by Treasury.
Today is another very busy one on the economics calendar, but does anybody care.
Friday is the BLS Jobs Report plus reports on US Productivity/Costs, Factory Orders and non-manufacturing Business Activity. But, will anybody care?
I happen to believe that the US is in recession today. Even by the govt’s own figuring of inflation data, which far understates true inflation, it is a fact that US inflation is growing faster than the economy, which is another way of stating that US wealth is being rapidly destroyed.
As I said yesterday, I am not playing with numbers. The US govt economists are stating that 4Q07 Real GDP is growing at an annual rate of +1.5 pct while the PCE Price Index is growing at +2.5 pct.
Moreover, the forecasts of the govt’s economists are for 1Q08 Real GDP to grow at an annual rate of +1.6 pct while the PCE Price Index is growing at +1.8 pct, so while the wealth destruction process is expected to slow, it is a fact that even the Administration has the opinion that for at least two quarters America is stagflating. And, I have never seen a period of time where such an economic condition does not pull down equity and debt prices. It is only a matter of time.
Some might say that the current enthusiasm for stock prices might send the Dow 30 level to 14,000 or 15,000 before the Bull dies. I have to agree with the possibility, but then I have already opined that we have been forced to become day traders. Day traders watch prices by the second, and move in and out of markets in hours and minutes. If you are up to it, have at it.
The Administration and the Fed can either let prices fall or they can inflate them to make it appear to the people that the value of their assets is not declining even though the cost of living is rising. Should the authorities decide to drop rates, which is reflation, then the prices of commodities (oil, gold, agri products, etc) will stay at high levels, but the econ slowdown will see less real disposable income in the hands of consumers and businesses, so the operating results of manufacturers, retailers, tech and telecom firms will weaken, and so will the share prices.
I continue to opine that this is not the time when we ought to be aggressively trying to build new wealth. I continue to advise that astute traders are selling into strength.
I noted that two days ago, the Daily RSI-7 for the Cara 100 read 7 > 70 and 6 < 30, which was fairly balanced. After yesterday’s close, the scoreboard read 14:1, and today and tomorrow will likely take that record higher. Then on Monday and Tuesday -- unless on Tuesday afternoon the Fed does nothing -- the score will be even more extreme.
At that point, everybody on the Bull side will be happy that the market is in flat-out rally mode that should take high price levels through at least to year-end. The Bears will be unhappy, struggling to keep themselves above the waterline.
And where I will be -- other than resting up on a Caribbean beach that is -- is in the middle of the Bulls and Bears, loading ammunition. There is nothing wrong with cash.
Nobody is making me play this silly game. Think about it.
My final comment is that I believe I played the USD:Gold trade properly. The $USD continues to spike, and the Gold price drop. Where are all the pundits who were rushing to TV studios three weeks ago to tell the world they could see $1,000, $2,000, $3,000… gold in their crystal ball?
The $USD is currently at 76.724, which is what I had forecasted… almost 77 !! You recall what I had forecasted after the price had dropped to about 74.6 about two weeks ago.
Now, after the ECB did their non-move at 7:45am ET, there is a bump in the Euro, cut in the $USD and a slight bump in Gold, but that will not last long, I believe.
This is one day trader sitting in $USD, watching everybody else jump on the bandwagon. At some point in the months ahead, I will almost certainly say to you, ok, let’s back up the truck and load up gold bars.
International Economics Review
Q3 Revision to US Productivity/Costs Report.
US Factory Orders Report for Oct.
US ISM Business Index Report of non-manufacturing activity.
US NAR Pending Sales of Existing Homes Report for Oct.
Cara 100 Daily RSI-7 Charts
International Equity Markets Review
Europe
Here is the latest session data for the bourses of Europe.
Here is the latest chart for the London Stock Exchange FTSE.
Here is the latest chart for the German DAX.
Here is the latest chart for the French CAC 40.
Here is the latest chart for the Milan Italy stock exchange MIBTEL.
Here is the latest chart for the Swiss market index.
Asia-Pacific
Here is the latest session data for the Asia-Pacific stock exchanges.
Here is the latest chart for the Japanese Nikkei 225 index.
Here is the latest chart for the Singapore index .
Here is the latest chart for the Shanghai Composite index .
Here is the latest chart for the Hong Kong Hang Seng index .
Here is the latest chart for the India BSE 30 index .
Here is the latest chart for the Australian All Ordinaries index .
US and the Americas
Here is the latest session data for the exchanges of the Americas.
Here is the latest chart for the Brazilian Bovespa stock exchange in Sao Paulo.
Here is the latest chart for the Toronto Stock Exchange composite index.
US Equity Markets Review
NASDAQ Composite (interactive) chart
Table: Dow 30 List
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
You can do this table yourself by entering the following string into the Summaries window at www.billcara2.com and then clicking on the link for Performance.
AA AIG AXP BA C CAT DD DIS GE GM HD HON HPQ IBM INTC JNJ JPM KO MCD MMM MO MRK MSFT PFE PG T UTX VZ WMT XOM
Here are the links to interactive Dow charts from Billcara2.com that I broke into groups of ten, which you can add technical indicators for as well. (list one) (list two) (list three)
The Americas
Here is the latest session data for the exchanges of the Americas.
Here is the latest chart for the Brazilian Bovespa stock exchange in Sao Paulo.
Here is the latest session data for the Toronto Stock Exchange composite index.
Sector ETF Summary for the US equity market
The tables I show in this section 2007_12_05 are for ten (GICS) Sector Index Funds (ETF’s) only, but they cover the full spectrum of the US equity market.
Table 1: Cara ETF List is sorted by price performance Week over Week (W/W), i.e. 1W%N.
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
You can do this table yourself by entering the following string into the Summary window at Billcara2.com and then clicking on the link for Performance. XLE XLB XLI XLY XLP IYH XLF SMH IYZ XLU . You can also add more ETF’s – up to 30 in total.
For a list of components to any ETF, go to the AMEX.com web site, and click on ETF’s.
10 (energy: XLE)

15 (basic materials: XLB)

20 (industrial: XLI)

25 (consumer discretionary: XLY)

30 (consumer staples: XLP)

35 (healthcare: IYH)

40 (financial: XLF)

45 (technology, semiconductor: SMH)

50 (telecom: IYZ)

55 (utilities: XLU)

International Equity Market USD-denominated ETF Review
Table 13: International equities via the USD-denominated ETF perspective
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Japanese equity market ETF: EWJ
Here is the Japanese (EWJ) equity market ETF Daily data charts:


U.K. equity market ETF
Here is the United Kingdom (EWU) equity market ETF Daily data charts:
EWU Daily data:


Canada’s equity market
Here is the Canadian (EWC) equity market ETF Daily data charts:


Bonds & Yields Review
Table 10: US Treasury Yields
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 3 Month | 2.96 | 2.95 | 2.93 | 3.59 |
| 6 Month | 3.13 | 3.09 | 3.24 | 3.76 |
| 2 Year | 2.93 | 2.86 | 3.18 | 3.67 |
| 3 Year | 2.91 | 2.87 | 3.11 | 3.65 |
| 5 Year | 3.32 | 3.27 | 3.49 | 3.96 |
| 10 Year | 3.95 | 3.89 | 4.03 | 4.34 |
| 30 Year | 4.43 | 4.35 | 4.43 | 4.63 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 3.13 | 3.15 | 3.21 | 3.29 |
| 2yr AAA | 3.14 | 3.16 | 3.24 | 3.28 |
| 2yr A | 3.26 | 3.28 | 3.36 | 3.30 |
| 5yr AAA | 3.33 | 3.30 | 3.33 | 3.40 |
| 5yr AA | 3.24 | 3.33 | 3.28 | 3.43 |
| 5yr A | 3.43 | 3.41 | 3.43 | 3.50 |
| 10yr AAA | 3.69 | 3.71 | 3.71 | 3.78 |
| 10yr AA | 3.56 | 4.01 | 3.56 | 3.75 |
| 10yr A | 3.92 | 3.94 | 3.94 | 4.01 |
| 20yr AAA | 4.37 | 4.38 | 4.38 | 4.43 |
| 20yr AA | 4.17 | 4.17 | 4.59 | 4.63 |
| 20yr A | 4.74 | 4.74 | 4.74 | 4.44 |
| Maturity | Yield | Yesterday | Last Week | Last Month |
|---|---|---|---|---|
| 2yr AA | 4.11 | 4.09 | 4.35 | 4.55 |
| 2yr A | 4.41 | 4.33 | 4.68 | 4.75 |
| 5yr AAA | 4.50 | 4.41 | 4.62 | 4.76 |
| 5yr AA | 4.66 | 4.61 | 4.82 | 5.09 |
| 5yr A | 4.59 | 4.53 | 4.70 | 5.03 |
| 10yr AAA | 5.11 | 5.01 | 5.10 | 5.19 |
| 10yr AA | 5.40 | 5.31 | 5.51 | 5.66 |
| 10yr A | 5.59 | 5.45 | 5.59 | 5.79 |
| 20yr AAA | 5.38 | 5.29 | 5.60 | 5.04 |
| 20yr AA | 5.62 | 5.53 | 5.74 | 5.90 |
| 20yr A | 6.12 | 6.04 | 6.06 | 6.06 |
Here is the $USB 30-year Treasury Bond chart.

US Bond Funds -- Interactive Daily Data Charts
SHY Daily data series chart:
IEF Daily data series chart:
TLT Daily data series chart:
AGG Daily data series chart:
LQD Daily data series chart:
TIP Daily data series chart:
Table 11: Interest-sensitive securities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Consumer Finance -USA -- Interactive Daily Data Charts
Commodities Review
Interactive Chart of Daily CRB Commodities Index:

Interactive Chart of Weekly CRB Commodities Index:

Oil Review
Here is the e-miNY Jan-08 Crude Oil chart.
Interactive Chart of Daily Crude Oil:

Interactive Chart of Weekly Crude Oil:

Table 2: Senior oil & gas equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |
Gold & Precious Metals Review
Interactive Chart of Daily Gold EOD Continuous Contract Index:

Interactive Chart of Weekly Gold EOD Continuous Contract Index:

Spot silver chart for the week
Interactive daily data
Interactive Chart of Daily Silver EOD Continuous Contract Index:

Interactive chart of the Silver Bullion index.
Interactive Chart of Weekly Silver EOD Continuous Contract Index:

Spot platinum chart for the past three days
Interactive Chart of Daily Platinum EOD Continuous Contract Index:

Interactive Chart of Weekly Platinum EOD Continuous Contract Index:

Interactive chart of the Platinum metal index.
Spot palladium chart for the week
Interactive Chart of Daily Palladium EOD Continuous Contract Index:

Interactive Chart of Weekly Palladium EOD Continuous Contract Index:

Interactive chart of the Palladium metal index.
Interactive Chart of Weekly Copper EOD Continuous Contract Index:


Interactive Chart of Daily Copper EOD Continuous Contract Index:
Interactive chart of the Copper metal index.
Table 12: Senior gold equities
| Symbol | Close | 1Day Change |
1Day %Change |
1W %Change |
2W %Change |
4W %Change |
YTD %Change |
3M %Change |
6M %Change |
12M %Change |








