Dow Closes Over 12000

[Annie]

http://today.reuters.com/news/artic...TRUKOC_0_US-MARKETS-STOCKS.xml&src=rss&rpc=23

Dow ends above 12,000, lifted by profits, Altria
Thu Oct 19, 2006 4:15 PM ET

NEW YORK (Reuters) - The Dow Jones industrial average <.DJI> ended above 12,000 for the first time as U.S. stocks edged higher on stronger-than-expected profits from companies such as Coca-Cola Co. <KO.N>

A jump in shares of Altria Group Inc. <MO.N> on speculation that it could be closer to announcing the long-awaited spin-off of a part of its Kraft Foods Inc. <KFT.N> unit, also underpinned the Dow's climb.

But rebounding crude oil prices and a report showing weakness in manufacturing in the Mid-Atlantic region limited gains.

Based on the latest available data, the Dow Jones industrial average <.DJI> gained 19.13 points, or 0.16 percent, for an unofficial finish at 12,011.81 -- a record closing high.

The Standard & Poor's 500 Index <.SPX> rose 0.94 point, or 0.07 percent, to 1,366.90. The Nasdaq Composite Index <.IXIC> added 3.79 points, or 0.16 percent, to 2,340.94.

 

[KarlMarx]

Clinton once said "It's the economy stupid"....

This new could not have happened at a worse time for the Dems because it may have an effect on the elections next month. And the effect will not be to the Dems' liking.

The startling revelations of Rep Foley are now becoming old news. The DJIA crossing the 12000 mark is now front page news, as is any time the DJIA crosses cross a triple zero milestone.

This milestone brings credence to the Administration's claim that the economy is good and validates to people in general that they actually are better off than they were in 2000.

Add the fact that gasoline prices are headed downward and unemployment is at the lowest point in years. The last report was about 4.7%, which may be the same or slightly higher than the best unemployment numbers during the Clinton Administration. In fact, in spite of the fact that gas prices shot up, inflation does not seem to have risen much at all.

The earnings reports that have been coming in are almost all good, so the rally that we are seeing may be founded on solid ground. Unlike the stock market of the late 1990s that was fueled primarily by speculation on ".com" stocks.

In contrast, all the Democrats can offer is revelation of scandal and promising investigation, impeachment and general disruption of the government if they are voted in. This should give the impression that they had no part in bringing about the generally good economic times that we are currently in.

In addition, they seem to be stuck in prophet of doom mode, trying to convince us that people are starving, the corporations are getting rich while the working class is being sent to the poor house. None of this seems credible to a nation that is hearing non-stop "help wanted" ads, working overtime, trying to fill back logs and seeing the value of their 401(k) plans rising.

I liken their scare tactics to someone yelling "FIRE" at a water theme park... it's possible, but not very believable. The problem with this approach is that it may come back to haunt them.


(I KNOW!!!! IT'S A PLOT BY THE WHITE HOUSE!!!! I KNEW IT!!!! KARL ROVE MUST BE INVOLVED SOMEHOW!!!!)

 

[BaronVonBigmeat]

Take off that growth in home values and you see an economic slowdown in the making, which is precisely what retail sales and the sales tax receipts are beginning to show. And that is on top of what could be a real cutback in jobs in the home construction market.

Much of the current home construction employment is due to homes started last spring. It takes 9 to 12 months to build a home (unless it is the townhome down my street which has taken two years, but no one actually seems to be working there). We are watching new home permits drop, which is going to mean housing employment will suffer. Professor Nouriel Roubini estimates that construction jobs could fall as much as 40-50,000 per month with a few months, as the lagging effect on home building takes its toll.

The bubble goes "pop"!

And while we are talking about Nouriel's work, let's close with a few paragraphs from his recent posting. Many are suggesting that the recent drop in oil and commodity prices is bullish for the economy. Not so, he argues.

The first paragraph is a quote from the Financial Times, and the rest are his comments:

" '...The reduction in prices we see today is the result of expectations of weaker demand rather than of improvements in supply. This makes the fall much more worrying than it may initially seem. If the decline in prices were to continue, it would be an indication of continued weakness in global demand. Worse, it would also undermine the price stability needed for investment in both increased supply and more efficient use of the world's scarce energy resources. Do not cheer too soon. This good news may yet turn out quite bad.'

"In conclusion, the soft-landing bulls are getting it wrong and are altogether confusing cause and effect when they argue that lower oil prices are good news and good signals for future economic activity in the US: oil and commodity prices are exactly falling because we are now experiencing a US and global economic slowdown; so such price action should be interpreted as bad news rather than good news. This is the typical fallacy of non-economists that take a partial equilibrium - rather than a general equilibrium - approach to analyzing data; an economist would ask himself or herself: why are oil and commodity prices falling at the same time? What is the cause of it?

"There is only one clear and consistent explanation of this generalized price fall: the US is sharply slowing down, dragging with itself the global economy. So, paradoxically, falling oil prices are bad news for the economy: they are the proverbial canary in the mine warning us of the recession risks ahead. Indeed, what both the oil and commodity markets and the bond markets and the housing market are telling us - or screaming at us - is: slowdown and recession risks ahead!

"The fact that the stock market is allegedly now providing a signal that is different from the bond market and the oil and commodity markets can be then interpreted - as I have since August - as the typical suckers' rally that accompanies slowdowns where the Fed is expected to come to the rescue of the market and the economy. Remember that in 2001 95% of all economic forecasters predicted in March 2001 no recession that year; too bad that the economy had already entered into a recession by March 2001. The wishful hope of forecasters and markets was that the Fed easing would rescue the economy and that the economy would experience a second-half rebound.

"Indeed, in typical suckers' rally mode the S&P index rallied a whopping 18% in April and May 2001. It was only in June 2001 when even more severe signs of a recession clearly emerged that the stock market started to rapidly tank into a free fall. So, such stock market suckers' rallies are very common at the outset of the recession. The reality is that stock markets are often wrong: sometimes they predict recessions that do not occur but, at times like in 2001, they fail to predict recessions that are already ongoing."

I think less than 5% of economists are predicting a recession today. Take no comfort in the consensus view.

http://www.frontlinethoughts.com/article.asp?id=mwo101306

 

[Hamiltonian]

I see this generally being good for consumer confidence (and therefore people will think well of the Republicans right now) although I also think that we overall have an investment market that is not very stable, and if the housing market crashes sometime soon you'll get the opposite effect.

 

[djones]

7

 

[djones]

U.S. markets today on 26/3 look under pressure after full weak rally.
Global market to follow dow's performance.

 

[djones]