Tuesday, September 1, 2009

US Stocks Close Lower In Fincls Led, Broad Slide

Nearly every component was a dog of the Dow on Tuesday, as Bank of America, American Express and JPMorgan paced a broad-market, financials-led pullback that pushed 29 of the Dow Jones Industrial Average's 30 components into the red.

After ticking slightly higher following a report that the Institute for Supply Management's monthly manufacturing index marked its highest reading since June 2007, stocks sold off for the rest of the session. Banks were at the forefront of the declines after pacing the market higher for much of August, especially in the last week. (more)

Oil rules may kill price

A debate is emerging over how curbs on energy market speculation may affect oil prices, with at least one major bank boldly expecting the new rules will trigger a 30% price plunge.

The outcome holds wide-ranging implications for G20 developed nations that are collectively spending as much as US$4.8-trillion to stimulate their economies through the worst global recession in decades.

"Regulators don't and shouldn't talk about trying to influence prices," said John Brodman, a former deputy assistant secretary at the U.S. Department of Energy. "But there's a growing political imperative out there. An oil price rise of US$30 a barrel would offset 40% of the stimulus spending. That's not what these countries are looking for." (more)

Futures and Options Traders Magazine August 2009

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The Wall Street Journal Asia September 1 2009

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Property taxes: How to beat 'em

(Money Magazine) -- You know that your home's value has tanked. So why doesn't the blasted tax man?

Home prices fell 27% from the 2006 peak to the end of 2008, according to the S&P/Case-Shiller Index, while the amount municipalities collected in property taxes rose 12% from 2006 to 2008.

There's a simple fix: Dispute your home's assessment -- and win. Simple, but not always easy. Municipalities are flooded with homeowners seeking tax reductions, and many towns are reluctant to deliver "because they can't find money anywhere else," says Leslie Sellers, president-elect of the Appraisal Institute. (more)

Is $9 trillion estimate on deficit too low?

The midyear budget corrections from the White House and the CBO have been issued, and the item most people talk about is the fact that the White House increased its deficit estimates $2 trillion from the $7 trillion that had been the centerpiece of their economic policy back in January to approximately $9 trillion.

Most pundits have pointed this out, but some economists have started to observe that even the $9 trillion estimate of the CBO is potentially only 66% of the true deficit we shall see in the next ten years.

The best place to see this graphically is at the site of the Concord Coalition. They have a graph showing that they agree with the 2009 and 2010 estimates, but then diverge from the CBO estimates and predict higher deficits throughout the decade. However, they are willing to point out why: (more)

Shanghai Index May Drop 25% on Economy, Xie Says

The Shanghai Composite Index, the world’s worst performer in August, may fall another 25 percent as China’s economic recovery isn’t “sustainable,” former Morgan Stanley Asian economist Andy Xie said.

The measure plunged 6.7 percent to 2,667.75 yesterday, the most since June 2008, and entered a bear market on concern a slower lending growth may derail a rebound in the world’s third- largest economy. Xie said the index “should be 2000 or less.”

“The market is in deep bubble territory,” Xie, 49, who correctly predicted in April 2007 that China’s equities would tumble, said in an interview with Bloomberg Television. (more)

China Manufacturing Grows at Fastest Pace Since 2008

China’s manufacturing expanded at the fastest pace in 16 months in August as the economy maintained momentum after record lending in the first half of the year.

The official Purchasing Managers’ Index rose to a seasonally adjusted 54 from 53.3 in July, the Federation of Logistics and Purchasing said today in Beijing in an e-mailed statement. A reading above 50 indicates an expansion.

Investors and economists are split on the outlook for the world’s third-biggest economy as banks rein in credit growth to counter the risk of asset bubbles and bad loans. The plunge by the Shanghai Composite Index into a bear market yesterday contrasted with a Bloomberg News survey showing economists expect the government to top its 8 percent economic growth target this year. (more)

3 Triggers for Higher Oil Prices

Oil prices recently came close to $75 a barrel before heading south again. Enjoy the cheap oil while you can. The odds are you’ll be paying higher oil prices by the end of the year.

The good news is there are some easy ways to profit from it. First, let’s look at the forces that could drive oil higher …

Force #1 — The Crisis at Our Border. Mexico’s oil production is on the slippery slope of doom. Pemex, Mexico’s national oil company, said that it now expects to produce 2.6 million barrels a day this year, a big drop from earlier estimates of 2.8 million barrels a day made just months ago. (more)