Stock Market Update - Wednesday, September 22, 2010 Cautious Outlook Gold Climbs

Stock Market Update
Wednesday, September 22, 2010


Latest News Headlines:

Dow Jones	10,739.31	-21.08	(-0.20%)
S&P 500	1,134.29	-5.49	(-0.48%)
Nasdaq	2,334.55	-14.80	(-0.63%)

Sector summary

Sector	Change
Basic Materials	+0.59%
Capital Goods	-0.74%
Conglomerates	-0.53%
Cons. Cyclical	-0.80%
Cons. Non-Cyclical	+0.16%
Energy	-0.60%
Financial	-1.01%
Healthcare	-0.10%
Services	-0.27%
Technology	-0.63%
Transportation	-0.32%
Utilities	+0.44%

Commodities
Crude Oil	74.77	+ 0.08%
Natural Gas	3.99	+ 0.68%
Gasoline	1.90	-
Heating Oil	2.11	-
Gold	1291.18	+ 0.36%
Silver	21.14	+ 0.86%
Copper	3.56	+ 2.59%
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Dow Jones 3:00 PM Averages: DJIA 10,760.13 DN 0.90

30 INDUS 10,760.13 DN 0.90 OR 0.01%
20 TRANSP 4,486.16 DN 25.11 OR 0.56%
15 UTILS 398.76 UP 3.62 OR 0.92%
65 STOCKS 3,722.77 DN 0.18 OR 0.00%


US Stocks Lower On Further Fed Contraction Concerns
U.S. stocks fell Wednesday as investors re-calibrated their positions amid deepening worries at the Federal Reserve over deflation and the possibility of further monetary easing.

The Dow Jones Industrial Average slipped 32 points, or 0.3%, to 10729 in mid-day trading, while the Standard & Poor's 500-stock index slipped six points to 1134 and the Nasdaq Composite fell 20 points to 2330.

The indexes were weighed by a pullback in technology stocks after a strong month that had seen the Nasdaq gain 11% coming into the current session.

Hewlett-Packard slipped 1.7% and Microsoft fell 2.7% to lead the Dow's decliners. Microsoft's stumble came after the tech giant said late Tuesday it would raise its quarterly dividend payable to shareholders to 16 cents a share from 13 cents a share. Adobe Systems plunged 20% after its fourth-quarter earnings and revenue forecast fell below market expectations.

Financials were also a heavy weight on the market, with J.P. Morgan Chase falling 1.3% and Bank of America slipping 0.8%. Citigroup and Goldman Sachs shed 1.3% each.

Limiting losses on the blue-chip index was Alcoa, which led the Dow's advancers with a 3.4% gain.

Treasurys were mixed, with the two-year note falling after a day of gains that pushed yields, which declines as the price rises, to a record low. The benchmark 10-year note gained, pushing yields down to 2.521%.

The moves extended Tuesday's action, which saw Treasurys and gold surge and the dollar plunge after the Fed said it was "prepared to provide additional accommodation if needed to support the economic recovery." Stock markets ended mixed, with the Dow squeezing out a fifth consecutive day of gains.


US Internal Security Threats Growing From Citizen Protests
Taxpayer-funded bulletins listed meetings of Tea Parties, Quakers and Pittsburgh anti-war activists as potential security threats.

A year's worth of bulletins released Friday by the governor's office shows the Institute of Terrorism Research and Response warned state Homeland Security officials about events as far away as the Sinai and as easy to predict as looking at a calendar.



Typical US City Government - Caught with Hand in Cookie Jar
Ever wonder why the great American dream is falling apart? Read This Story.
It has been happening all across America. But most are not reported.


California City of Bell Was Run Like `Petty-Cash Drawer,' Controller Says
By Christopher Palmeri

Bell, California, the Los Angeles suburb that paid its city manager almost $800,000 a year, illegally raised taxes, mismanaged bond funds and entered into improper contracts and land purchases, according to an audit by state Controller John Chiang.

The city used $93,000 to repay two personal loans extended to its former manager, Robert Rizzo, and approved $1.5 million in other loans to city employees without legal authorization, the controller’s office said today.

“The city had almost no accounting controls, no checks or balances, and the general fund was run like a petty-cash drawer,” Chiang, a Democrat who is running for re-election in November, said in a statement. “The city’s purse-strings were tied to only one individual, resulting in a perfect breeding ground for fraudulent, wasteful spending.”

Rizzo, 56, was among eight current and former city officials arrested yesterday, according to Los Angeles County District Attorney Steve Cooley. Rizzo was charged with 53 counts of misappropriating public funds and conflict of interest. He is scheduled to appear in court today.

In addition to the criminal charges, Rizzo and seven others face a civil complaint filed by the state attorney general’s office Sept. 15.

The prosecution is politically motivated, Rizzo’s lawyer, James Spertus, said in a telephone interview. The district attorney, a Republican, is running for state attorney general in November, and Attorney General Jerry Brown, a Democrat, is running for governor.

‘City Approval’

“Mr. Rizzo was paying off his own loans with his own money, he was not using public funds,” the Los Angeles Times quoted Spertus as saying. “I do know, and I confirmed with Mr. Rizzo, the loans were paid with salary and declared as income on his taxes, and it was done with city approval.”

The audit said Bell’s City Council increased the tax assessment for the Sanitation and Sewerage System District without voter approval, an improper tax increase amounting to $621,737 from the fiscal year starting in 2007 through 2010.

The city issued $50 million of a $70 million voter-approved bond measure without a documented plan to use the proceeds, then lost $1.7 million in potential interest earnings because most of the money was deposited in a non-interest-bearing account, according to the audit.

Tax Receipts

Property-tax receipts that were supposed to pay back the bonds were deposited into the city’s general fund, its main account, rather than to a restricted debt-service fund, the audit found. Rizzo’s salary raises were contingent on a positive cash balance in the general fund, the audit said.

Bell paid $4.8 million to purchase land from a former mayor without documenting the purpose, the audit said. In addition, $10.4 million was paid to two companies owned by the city’s then-director of planning services.

A city of 38,000 where nearly one in six residents lives below the poverty line, Bell made national headlines in July when the Times disclosed Rizzo’s salary.

In the 17 years that Rizzo served as Bell’s manager, his annual salary rose to $787,000, or 11 times the starting figure, the controller’s office said.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net




Typical US Government - Caught Wasting Money Again
Ever wonder why the great American dream is falling apart? Read This Story.
It has been happening in every US government agency in America. But most are not reported.


Government agencies get criticized regularly for their gross inefficiencies, and billion-dollar wastes, but are almost never reported in mainstream media.

As it appeared in the September 13, 2010 issue of InformationWeek article.

"Watchdogs Blast Fed IT Execution"

"Public advocacy groups last week took the federal government to task for failing to execute on President Obama's Open Government Directive and for its continued mishandling of major IT projects.

At the Gov 2.0 Summit in Washington, co-sponsored by O'Reilly Media and UBM TechWeb, Sunlight Foundation executive director Ellen Miller described government spending data on the USAspending.gov site as being "almost entirely useless." Using its own online tool, Clearspending.org, Sunlight Foundation concluded that nearly $1.4 trillion in annual federal spending was misreported by the government's data bases."




US Dollar Slides
US Dollar Futures Index DXY, Day's Range: 79.56 - 80.29, Now 79.88


Bonds, Gold Gain as Dollar Declines
Gold rallied toward a fresh record high, recently trading at $1,290.90 an ounce, while the U.S. dollar continued to fall sharply against its major rivals.

The dollar fell sharply after the Federal Reserve's statement, on the view that further asset purchases by the central bank would devalue the greenback. The ICE Dollar Index, which tracks the currency against those of some major U.S. trading partners, on Wednesday hit its lowest level since March.

Bonds rose around the world, the Dollar Index fell to a six-month low and gold climbed to a record on speculation the Federal Reserve will put more cash into the economy.

In the currency markets, the euro gained 1% to $1.3383 while the yen strengthened to trade at 84.42 yen to the dollar. The U.S. Dollar Index, which tracks the performance of the greenback against a basket of other major currencies, fell 0.9%.



Gold Nears $1,300 On Weak Dollar
Gold historically trades inversely to the dollar.

Dec gold $1,292.10, up $17.80; Range $1,287.50-$1,298.00
Dec silver $21.055, up 41.5 cents; Range $20.930-$21.200
Oct platinum $1,632.90, up $20.50; Range $1,621.00-$1,640.80
Dec palladium $541.90, up $11.85; Range $534.05-$547.65

Gold futures continued their march into record territory on Wednesday, closing in on the $1,300 mark as speculation that the Federal Reserve will flood the market with cash enhanced gold's appeal as an alternative asset.

The most actively traded gold contract, for December delivery, rose $22, or 1.7%, to $1,296.30 an ounce on the Comex division of the New York Mercantile Exchange. It set a new record intraday high of $1,298 an ounce earlier Wednesday.

Gold rose in Asian and European trading after Tuesday's meeting of the Federal Reserve's policy-making committee. The central bank announced no new steps to boost the sluggish economy, but its statement was widely interpreted as signaling further easing of monetary policy. The Fed appeared "to lower the bar for additional easing and it pointed to an increased focus on inflation as opposed to unemployment," said Suki Cooper, analyst with Barclays Capital.

JP Morgan Chase & Co. (JPM) increased its exposure to gold as market participants have piled into the metal this year. Ian Henderson, who oversees $7 billion in natural-resource assets at JP Morgan Asset Management, said his fund's gold and precious metals weighting stands at 38%, up from 32% six months ago.


US House Prices Fall Second Straight Month
U.S. house prices worst in nearly six years. U.S. home prices fell in July, a government agency says, the second straight monthly decline as the industry suffers from the loss of a tax credit that had given sales a boost.

Home prices dropped 0.5% on a seasonally adjusted basis from June, according to the Federal Housing Finance Agency's home price index Wednesday. That followed a 1.2% decline in June from May. U.S. home prices in July were down 3.3% from July 2009.

Home sales have collapsed in the U.S. since the April 30 end of the tax incentive, meant to spur the moribund housing market as the economy recovers from a long recession.



CRUDE OIL AND PETROLEUM PRODUCTS:

Crude Stocks Rise Prices Decline on Report
Nymex Crude Settles Down 26 Cents At $74.71/Bbl

U.S. crude inventories rose counter to analysts' expectations last week, according to data released Wednesday by the U.S. Department of Energy.

Crude oil stockpiles increased by 1 million barrels to 358.3 million barrels for the week ended Sept. 17, where analysts had expected a decline of 1.7 million barrels. Late Tuesday, the American Petroleum Institute (API), an industry group, reported a 2.2-million-barrel increase.

On the New York Mercantile Exchange, November crude oil futures traded flat at $74.97 a barrel, from $75.33 a barrel immediately before the data release. Inventories of crude oil and petroleum products remain at unusually high levels for this time of the year.

Gasoline stockpiles grew by 1.6 million barrels to 226.1 million barrels, the department's Energy Information Administration said in its weekly report.

Distillate stocks, which include heating oil and diesel fuel, increased by 300,000 barrels to 174.9 million barrels. Analysts projected a decline of 200,000 barrels.

Refining capacity utilization rose by 0.2 percentage point to 87.8% of capacity, where analysts had expected a 0.6-percentage point decline.

Refinery utilization rate 85.4% of capacity last week. The industry group API showed a 2.4-million increase in gasoline inventories and that distillate stocks rose by 2.5 million barrels.

U.S. Oil Inventories:
For week ended Sept. 17:
Crude Distillates Gasoline Refinery Use
EIA data: +1 +0.3 +1.6 +0.2
Forecast: -1.7 -0.2 -0.4 -0.6

Figures in millions of barrels, except for refining use, which is reported in percentage points.



Canadian Market:

Canada Dollar Ends Lower
The Canadian dollar ended lower after a voltile session Tuesday after a mid-day slump in crude oil futures and some disappointing retail sales data for July.

The U.S. dollar was at C$1.0300 at 3:47 p.m. EDT (1947 GMT), from C$1.0225 at 8:00 a.m. EDT (1200 GMT) and C$1.0261 late Tuesday.

Exchange rates at 3:47 p.m. EDT (1947 GMT), 8:00 a.m. EDT (1200 GMT), and late Tuesday.

USD/CAD 1.0300 1.0225 1.0261
EUR/CAD 1.3795 1.3669 1.3594
CAD/JPY 82.08 82.79 82.98

The stock market was slightly higher at midday Wednesday as a surge in the price of gold fueled gains in gold stocks. BlackBerry maker Research In Motion was also on positive ground, up C$1.18 to C$49.47, but the gains were offset by declines in the heavily weighted energy and financial services groups.

At 11:45 a.m. EDT (1545 GMT), the S&P/TSX Composite Index was up 6.80 points, or 0.06%, at 12177.37. Advances led declines 726 to 568. Trading volume was 134.50 million shares. The S&P/TSX 60 Index was up less than a point at 706.20.


Canada July Retail Sales Down 0.1%

Retail sales dropped 0.1% to C$35.86 billion (US$34.92 billion) after flattening out in June, revised down from a previously estimated 0.1% gain, Statistics Canada said Wednesday. Sales volumes were down 0.2%.

Canadian monthly retail sales fell in July, led by weaker sales at furniture and home furnishing stores. The slip in retail activity adds further support to the view the Bank of Canada could abstain from raising interest rates at its next policy meeting in October, analysts said.

Toronto Indexes, Volume; 3 PM EDT Composite Up 2.47

S&P/TSX Composite 12173.04 up 2.47 or 0.0%
S&P/TSX 60 Index 705.44 up 0.13 or 0.0%
Financials 174.27 off 1.80 or 1.0%
Materials 391.64 up 4.59 or 1.2%
Energy 273.64 off 1.25 or 0.5%
Industrials 103.97 up 0.39 or 0.4%
IT 27.39 off 0.08 or 0.3%

Volume Wednesday Tuesday
2-3 50.6M 81.4M
9:30-3 372.2M 392.2M





South American Markets:

BRAZIL:

Brazil Stocks Open Higher On Consumer Confidence, Lending

Brazilian stocks opened higher Wednesday after gains in Brazilian consumer confidence and outstanding loans, and the U.S. signaled it may increase stimulus measures.

The benchmark Ibovespa stock index opened at 68,256 points, up 0.79% from Tuesday's close of 66,808.

Brazil's main consumer confidence index increased in September, for the seventh-consecutive month, due to a positive outlook for the country's economy, the Getulio Vargas Foundation, or FGV, said Wednesday.

State-controlled oil company Petroleo Brasileiro SA (PBR, PETR4.BR), or Petrobras, plans on raising as much as $78 billion, of which $25 billion would come from minority shareholders. The sale of shares, to be priced Thursday, brought in $9 billion from overseas investors in just five days, the Estado de S. Paulo newspaper reported.


Brazil's Real Closes Stronger

The Brazilian real closed slightly stronger Wednesday as investors piling money into the country ahead of a multibillion dollar share sale offset promises of intervention by the central bank. The real closed at BRL1.7214 to the dollar compared with Tuesday's close of BRL1.7215.


Central Bank of Brazil to To Coordinate Forex Intervention

The Central Bank of Brazil will coordinate purchases of dollars using a government investment fund to help curb gains in the country's currency, the local Estado news agency reported Wednesday.

The central bank and the $10 billion investment fund will work together and will be able to purchase unlimited amounts of dollars in order to contain the Brazilian real, Finance Minister Guido Mantega was reported as saying. The comments helped pare gains in the currency, which traded at 1.7185 per dollar after touching 1.7050 per dollar earlier Wednesday.

Brazilian finance ministry officials have spoken up loudly in recent days as they've sought to rein in some of the real's strong gains, and late Monday unveiled plans which would allow them to use a $10 billion investment fund to buy up dollars.


Brazil Interest Rates Decline In August

Confirming a continued local economic expansion, Brazil's credit rates declined in August while credit volume rose, the central bank reported Wednesday.

According to central bank data, average interest rates paid on loans fell in August to 34.6% from 34.9%. The bank said the average credit rate for businesses rose to 27.3% annually in August from 26.9% the previous month, while the rate for individuals fell to 40.4% from 41.5% in July.

The decline in interest rates comes as Brazil's central bank this month suspended an interest-rate tightening cycle begun earlier this year by holding the country's reference Selic rate unchanged at 10.75%.


MEXICO:
Mexico's Stock Market Slips at Open

CHILE:
Chilean Peso Firms Midday
The Chilean peso firmed significantly against the dollar midday Wednesday, tracking the gains the euro posted versus the U.S. currency on international markets. The peso is currently trading near a 35-week high at CLP493.70 to the dollar, versus Tuesday's close at CLP497.20.

The common currency ticked above $1.34 to its strongest level since April, as investors broadly ditched the greenback on speculation the Federal Reserve could soon act to kickstart a slowing U.S. economy.

Chile's peso often moves in the same direction as the euro in relation to the dollar, as about a third of the country's exports are destined for European markets.


European Markets:

European stocks fell, with the Stoxx Europe 600 index shedding 1.3%.

London Late Gold And Silver At 1515 GMT

Current Bid-Ask Previous
---------------- ---------
Gold 1290.65-1291.45 1275.45-1276.45
Silver 21.02-21.04 20.60-20.62

GREECE:
The Greek Parliament is set to pass a controversial bill to liberalize the domestic trucking sector amid continuing protests causing traffic chaos and clashes with police.

IRELAND:
Dublin Stocks: ISEQ Ending -1.4% At 2,710; AIB -5.8%



Asian Pacific Markets:

Asian markets finished mixed, with Japanese exporters weighing on the Nikkei Stock Average, which closed down 0.4%, but Hong Kong stocks hit a five-month high as property developers gained.

JAPAN:
Japan's trade ministry aims to cut the country's corporate tax rate and will seek to implement steps to spur demand for environmentally friendly products to help improve companies' competitiveness, the country's new trade minister said.

China's tourism authorities have asked local travel agencies not to promote travel to Japan amid an increasingly tense territorial dispute between the two countries.

Chinese authorities plan to fine Toyota's auto-finance unit for "commercial bribery," a move that comes in the midst of a diplomatic dispute between Beijing and Tokyo.


CHINA:

China and Russia agreed to invest around $5 billion in a joint oil refinery in the Chinese city of Tianjin, but once again they failed to agree on a long-awaited natural-gas supply deal.


VIETNAM:
The near-collapse of one of Vietnam's flagship state-owned companies is exposing the limits of this country's economic renaissance.




FOREX CURRENCIES:

EUR/USD	1.3384	+0.0137 (1.03%)
USD/JPY	84.3800	-0.7200 (-0.85%)
GBP/USD	1.5647	+0.0025 (0.16%)
CAD/USD	0.9685	-0.0077 (-0.78%)
USD/HKD	7.7581	-0.0030 (-0.04%)
USD/CNY	6.7035	-0.0024 (-0.04%)
AUD/USD	0.9534	-0.0007 (-0.07%)

World Markets Snapshot:

Shanghai	2,591.55	+2.84 (0.11%)
Nikkei 225	9,566.32	-35.79 (-0.37%)
Hang Seng Index	22,047.71	+45.12 (0.21%)
TSEC	8,196.40	+9.44 (0.12%)
FTSE 100	5,587.14	+10.95 (0.20%)
DJ EURO STOXX 50	2,774.55	-20.00 (-0.72%)
CAC 40	3,765.21	-19.19 (-0.51%)
S&P TSX	12,209.65	+39.08 (0.32%)
S&P/ASX 200	4,625.20	+7.70 (0.17%)
BSE Sensex	19,941.72	-59.83 (-0.30%)

Wednesday's US Economic Calendar:

7:00 a.m.
Sep 17 MBA Mortgage Applications Survey Market Composite Index (previous 801.5), Cur Chg (previous -8.9%), Purchase Index (S.A.) (previous 183.7), Cur Chg (previous -0.4%), Refinance Index (previous 4396.1), Cur Chg (previous -10.8%)

10:30 a.m.
Sep 17 EIA Petroleum Status Report Crude Oil Stocks (previous 357.37M), Crude Oil Stocks (Net Change) (expected -1.5M), Gasoline Stocks (previous 224.47M), Gasoline Stocks (Net Change) (expected 0), Distillate Stocks (previous 174.51M), Distillate Stocks (Net Change) (expected +100K), Refinery Usage (expected 87.1%)

2:00 p.m.
Tsy Secy Geithner testifies before House Financial Services Committee on the State of the International Financial System, Including International Regulatory Issues Relevant to the Implementation of the Dodd-Frank Act in Washington

US Market Summary Tuesday, Sept. 21. 2010

Stocks:

U.S. stocks remained flat Tuesday in light trading after the Federal Reserve hinted it would defer additional action to stimulate economic growth. The central bank deferred taking any steps to boost the recovery. But Fed officials signaled at the end of their one-day policy meeting that they are uncomfortable with the recent low levels of inflation and said they expect the economy's recovery from a deep recession to be modest in the near term. Central bank officials said in a statement they're "prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate."

Treasurys:

Treasurys rallied hard Tuesday as expectations grew that the Federal Reserve will eventually launch another large-scale bond buying program to help the economy. The two-year yield dropped to a record low of 0.420% after the Fed's latest take on the economy, which was downbeat and suggested that it is especially concerned about the threat of deflation. The statement fanned hopes that the Fed will have to lend more support to the economy to help it heal. Trading was volatile after the decision, but prices eventually rose sharply as investors digested the news, marking three consecutive days now of gains for the Treasurys market.

Forex:

The dollar dropped lower late Tuesday, after the Federal Reserve hinted it was becoming uneasy about the outlook for the U.S. economy in 2011, but deferred taking any new steps to boost the recovery amidst intense internal debate about what to do next. Fed officials signaled that they are uncomfortable with the recent very low inflation levels and said they expect the economy's recovery to be modest in the near term. This indicates that more bond purchases to stimulate growth could soon take place.