4um: Market Wrap Up (7-3-2008)

Title: Market Wrap Up (7-3-2008)
Source: FSO
URL Source: [None]
Published: Jul 3, 2008
Author: MICHAEL PANZNER
Post Date: 2008-07-03 17:49:15 by orangedog
Ping List: *unUsual Suspects* Subscribe to *unUsual Suspects*
Keywords: None
Views: 386
Comments: 38

Today's Market WrapUp 07.03.2008 Mon Tue Wed Thu Fri Panzner Archive

NOT QUITE SLOW AND STEADY
BY MICHAEL PANZNER

Despite plenty of evidence that domestic demand continues to weaken, some analysts have remained upbeat on the economy (and the stock market). One reason for their optimism is their belief that dollar weakness will (continue) to power export sales (especially at the large multinational companies whose shares comprise the S&P 500 index), more than making up for the difference. However, a graph of U.S. factory orders (yesterday, the Commerce Department announced better-than-expected data for May) vs. the U.S. Dollar Index suggests the relationship may not be what it was.

Today, the Bureau of Labor Statistics released its monthly employment report for June. Although the change in nonfarm payrolls came in at -62,000, in line with expectations, the figures were once again bolstered by a striking “birth/death” adjustment. According to the BLS, new businesses created a net 177,000 new jobs last month, with leisure/hospitality accounting for 86,000 and construction chipping in 29,000 (sounds like their statistical methods need some serious adjustments of their own). Regardless, one reading of the data suggests the U.S. is not only in recession, but that the downturn will continue for at least two more months.

Yesterday, the media made a big deal out of the fact that the Dow Jones Industrials Average, down more than 20% from its October 2007 peak, is officially in bear market territory. Of course, if you owned the wrong sectors, you blew through that particular milestone a while ago. Below is the return (through yesterday) for the 10 S&P 500 economic sectors since the bellwether index hit its closing peak on October 9, 2007.

Name	Return Since 10/9/07 Peak
	3/10/2008
Energy	8.72
Utilities	-1.63
Consumer Staples	-5.27
Materials	-9.26
Health Care	-15.78
Information Technology	-17.20

S&P 500	-19.40

Industrials	-22.92
Telecom Services	-25.34
Consumer Discretion	-26.65
Financials	-44.02

Finally, the cyclical sector, including mining, chemical and steel stocks, has been a heavy speculative favorite in recent months. However, technically at least, it looks like the tide may be turning in favor of shares that are more defensive. Below is a chart of the ratio of the benchmark cyclical index relative to the consumer index.

Stocks ended mixed-to-higher, aided by investor relief that today’s jobs report was not as bad as some had feared and pre-holiday-weekend short-covering/bargain-hunting following the sharp declines of recent weeks.

At the 1:00 p.m. early close, the Dow Jones Industrial Average was up 73.03, or 0.7%, to 11,288.54. The S&P 500 Index rose 1.37, or 0.1%, to 1,262.89. The Nasdaq Composite Index slid 6.08, or 0.3%, to 2,245.38.

August gold last traded at $936.00, down $10.50, while the Dollar Index rose 1%. The U.S. currency was aided by dovish comments from European Central Bank President Jean-Claude Trichet about the future outlook for European interest rates following today’s widely expected quarter-point hike (to 4.25%) in the ECB’s benchmark lending rate. Ten-year Treasury bond yields rose two basis points to 3.98%.

Michael Panzner

CONTACT INFORMATION
Michael Panzner
P.O. Box 115
Manhasset, NY 11030
Email | Website | WrapUp Archive | Financial Sense Editorial Archive

Copyright © James J. Puplava Financial Sense ® is a Registered Trademark
P. O. Box 503147 San Diego, CA 92150-3147 USA 858.487.3939

I'm back for the next week. Spent the last few days in the local hosptial being scanned and probed. Chest pain and trouble breathing. All they could turn up is a large thyroid nodule which was probably restricting my air way. Seemed like an eary call to me - take it out, but the docs have to be sure that it actually is a problem, so they keep scanning and probing and having meetings. I actually didn't hear until this morning when the surgeon called me that they decided to remove the nodule.

But anyway, looks like I'll be at home for a week and then have to check back in to the hospital for the surgery. Should be in one day and out the next. One good thing out of all of this is that I found out that me heart is in great shape. Passed the stress test and angiogram with flying colors.

sounds like you had a little scare, but glad to hear that it's something relatively minor. wish you the best with the procedure and a speedy recovery.

I am extremely lucky, no doubt. It could have been a lot worse. My care at the hostital was top notch and the staff was very professional. I definitely can understand why health insurance is such a big political issue. One visit like I just had could wipe out anyone without insurance and it was just for a throid problem.

Jeeze, hope everything's OK. I figured you were hob-nobbing with your e-lite buddies in Davos again manipulating the world markets or sumpthin'. ;)

Everything seems to be okay at least for the time being. I started having some health problems way back in the middle of Feb. Some sort of mystery illness - loss of appetite, weakness, generalized pain and dysphoria. It is like having an extreme case of mono without the fever. Been seeing various specialists and undergoing all sorts of tests without finding the cause. The first episode went away after about 6 weeks after I stated taking some pangestyme, a pancreatic enzyme. Thought the pangestyme was the magic bullet and all was going to be well but about two weeks ago, all the symptoms came back again. So I'm back to square one. Funny cause it is putting my docs on the spot and causing them a degree of stress since they don't like being stumped. Of couse, it is causing me a lot of stress because I don't like being sick and not knowing what to do about it. During the Feb episode, I could barely get off the sofa and thought I was getting ready to check out permanently. Can't remember ever being that sick before. Hopefully, this time won't get that bad.

July 4 (Bloomberg) -- Crude oil fell from near a record after Iran said it gave a ``constructive'' response to incentives intended to persuade the country to stop uranium enrichment.

A compromise may allay concern that Israel is ready to attack Iran's nuclear installations, starting a conflict likely to cut supply from OPEC's second- largest oil producer. Futures climbed to a record $145.85 a barrel yesterday on speculation tension in the Middle East may worsen.

The Haynesville Play is predicated on shale as the subsurface source of natural gas, according to information from M.B. Kumar, Office of Conservation geologist administrator.

The shale is a rock formation mainly composed of consolidated clay-sized particles deposited and buried in the north Louisiana geological basin more than 170 million years ago during the geologic Jurassic time. It's characterized by ultra-low permeability in contrast with the conventional sandstone/limestone reservoir rocks that have high permeability.

The U.S. currently produces roughly 30 trillion cubic feet of gas a year, and these numbers are dropping. According to Engelder, the technology exists to recover 50 trillion cubic feet of gas from the Marcellus, thus keeping the U.S. production up. If this recovery is realized, the Marcellus reservoir would be considered a Super Giant gas field.

Engelder, who has studied this area of the U.S. for most of his career and began looking into fractures under a National Science Foundation grant 25 years ago, has identified and mapped natural fractures in the Marcellus shale. He and Lash will present some of their recent work at the 2008 American Association of Petroleum Geologists Annual Convention and Exhibition this spring.

“This is one of the biggest booms New York has ever seen,” said Arthur Van Tyne, an oil and natural gas consultant from Wellsville in Allegany County. “It’s amazing the amount of money being spent here, and the amount of acreage being taken.”

Landowners in these parts have yet to hit it big. But they’re watching closely, hoping they’ll be the next Jed Clampett, now that gas companies are sniffing around parts of Erie, Cattaraugus and Allegany counties looking to make a deal.

“It’s going on, on a daily basis,” said Robert Christman, the Allegany County clerk. At least a half dozen land men, from places such as Texas and Oklahoma, file into the clerk’s office in Belmont each day to pore over county maps, land deeds and old lease agreements.

BISMARCK, N.D. - North Dakota's mineral resources director says it will probably be a decade before the promising Bakken shale formation has a significant effect on the nation's oil and gas supplies and prices.

Lynn Helms testified Wednesday in Bismarck at a hearing led by Sen. Kent Conrad, D-N.D., to discuss fuel prices.

The Bakken encompasses 25,000 square miles in North Dakota, Montana, Saskatchewan and Manitoba, with about two-thirds of the area in western North Dakota. The U.S. Geological Survey has estimated that up to 4.3 billion barrels of oil can be recovered from the formation using current technology.

Oil may be headed for $200 a barrel and the price of everything from wheat to gold set to cause yet more ructions in world commodities markets, but for European businesses, households and governments, natural gas may be the next big headache. Like oil, the price of this fossil fuel is rising dramatically. Now EU officials and others in the industry are warning that Europe is facing a supply crunch as well, whatever the price.

Europe is “sleepwalking” its way to a “staggering dependence on imports,” Paulo Scaroni, chief executive of Italy’s national energy company, Eni, told the World Energy Congress in Rome late last year. By 2020 gas demand could be 40% higher than in 2007, at a time when production in the 27-nation EU was “expected to halve.” The result, he stated, will mean doubling Europe’s annual imports from 300 billion cubic metres to 600 billion cubic metres. “We clearly run the risk of a gas shortage in the future,” he added.