"Oil holds above $67 amid improving US economy - Oil holds above $67 in afternoon European trading on signs of improving US economy"

By PABLO GORONDI, Associated Press

Last updated: 9:36 a.m., Friday, July 24, 2009

Oil prices held above $67 a barrel Friday, adding to gains made overnight, as world stock markets rallied on signs of improvement in the U.S. economy.

In Europe, benchmark crude for September delivery was up 11 cents to $67.27 a barrel in afternoon electronic trading on the New York Mercantile Exchange.

On Thursday, the contract added $1.76 to settle at $67.16.

Evidence that the recession-hit U.S. economy is strengthening has bolstered investor optimism and triggered a rally from $58.78 a barrel two weeks ago.

While crude demand hasn't rebounded yet, traders have begun to have more faith that consumption will eventually pick up.

"We haven't seen demand increase yet, but all the good news about the economy seems to be adding fuel to the fire," said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney.

"Just the fact that things are improving is enough to change the sentiment of a lot of people."

Investors were cheered by a National Association of Realtors report Thursday that said sales of previously occupied homes rose for the third month in a row.

The last time that happened was in the middle of the housing boom in early 2004.

The Dow Jones industrial average rose 2.1 percent Thursday to above 9,000 for the first time since January.

The Dow is up 11 percent in the last nine days, while on Friday stock markets in Asia and Europe were mostly higher.

"If the current optimism lifting shares is totally unfounded then the current strength in oil will probably not hold," said Olivier Jakob of Petromatrix in Switzerland.

"But if the global destruction of the economy has indeed bottomed ... then so should have the oil markets."

Most second quarter corporate results have beaten analyst expectations, but reports late Thursday from Microsoft Corp., American Express Co. and Amazon.com disappointed investors, suggesting the recovery could be bumpy.

"I wouldn't say the current fundamentals support oil at $65 to $70," Rigby said.

"A lot of countries aren't out of the woods yet."

"It's putting the cart before the horse, but that's what the market does."

Rigby said he expected oil to rise over the next few weeks and test an eight-month high of $73.23 a barrel reached on June 30.

According to JBC Energy in Vienna, while oil demand continues to be weak, "extremely volatile oil prices will hardly manage to buck overall sentiment" and are likely to follow the current rally in the stock markets.

"In Japan, crude imports fell by almost 20 percent in June as oil demand is evaporating," JBC said.

"Refiners in the world's third-largest oil consuming country ran their facilities at about 71 percent of capacity, according to latest official figures."

In other Nymex trading, gasoline for August delivery rose by more than 2 cents to $1.93 a gallon and heating oil gained over a penny to $1.78.

Natural gas for August delivery was flat at $3.56 per 1,000 cubic feet.

In London, Brent prices rose 18 cents to $69.43 a barrel on the ICE Futures exchange.

------

Associated Press writer Alex Kennedy in Singapore contributed to this report.

There are those who would define us as obstructionists...
people who have no offering...and yet I think none have
more love for our country than those who demand reality.

After the flush wears off...we must have resources for
our people...from swine flu to natural disasters...from
Social Security to Medicare...and they will not be there if
a new, modern, socially engineered vision saps the resources
for a vision of nationalized heath care and cap-and-trade, IMHO.

Good for them is my thought this morning, IH ....

I could have said it a bit differently, but I chose a higher tone ....

And so ...

My (our) generation "The Baby Boomers" have paid into Social Security
for 45 years, and Medicare for 44. Many of us expect the system to get into
some trouble as we came through as a group (we start in 2 years & I'll hit 65 in 5+).

One thing I did not expect is for some whiz-kid to decide to cut Social Security by
a half a trillion dollars to fund health care for people who have not paid one nickle
and won't have to...toward that benefit.

So, as they casually toss out their "Social Securty savings" to help fund free insurance...
expect, as seniors learn what that means, to watch support in the polls plummet.
People who hope to have Social Security aren't these "rich folk" the whiz-kid
promised to soak to give away health insurance. And, neither are small businesses:

http://www.usnews.com/blogs/capital-commer...businesses.html
...
Under a proposed House bill, all small businesses with payrolls over $250,000 would have to either
provide insurance coverage for their employees or pay a penalty.

Just how many businesses have enough payroll to face the penalty?

According to 2006 data from the federation, businesses with between five and nine workers, representing
about one million employers, had an average payroll of around $375,000 a year. A report from the Kaiser Family Foundation
found that only about half of firms with three to nine workers offered health benefits in 2008.

Half of the smallest businesses, therefore, will either come up with a $400-$800 a mo. per employee (depending on location)
or decide to pay an 8% of payroll penalty, or close their doors...watch for the latter. For those that don't think these whiz-kids will
cause more harm to health care than good...they'd got their eyes wide shut.

http://econlog.econlib.org/archives/2008/0...end_of_the.html


PERMANENT LINK | JULY 28, 2008
The End of the World
Arnold Kling

Tyler Cowen writes,

When it comes to the mortgage agencies, there is no real choice but to bail out the debt holders.
The alternative is a run on the dollar and collapse of faith in U.S. government securities and the end of the world.

Think of the U.S. government as the world's biggest hedge fund. One thing a hedge fund does is engage in credit arbitrage.
When you can borrow risk-free, you can make a profit holding risky assets. That is what Congress is hoping will happen with the Freddie-Fannie bailout.

We have grown accustomed to the assumption that the risk of default of U.S. government liabilities is zero.
That in turn allows Congress to act like the biggest hedge fund on the block.

But over a ten- or twenty-year horizon, are Treasuries really default-free? Or could the U.S. government suffer a loss of confidence
among investors, as happened to Fannie Mae and Freddie Mac?

Consider the long-term obligations of the U.S. government: Social Security, Medicare, the Pension Benefit Guaranty Corporation,
public employee pension plans. Add to those the risks of the securities that the government is effectively choosing to guarantee
in the Bear Stearns merger, the Freddie-Fannie prop-up, and other steps that are being taken or will be taken in the mortgage
and financial market. It seems to me that in order to achieve short-term stability we are piling on long-term fragility.

A lot of my portfolio is in inflation-indexed Treasury securities. At some point, though, I am going to start thinking that there is some default risk
in those securities, and I will be looking for a new risk-free asset. My guess is that the closest thing will be a highly diversified portfolio, one that
includes a lot of foreign securities.

There is a reason that Tyler calls this scenario "the end of the world." If people do not have confidence in the long-term
financial stability of the U.S. government, the chances are that they will not have much confidence in the long-term stability
of U.S. corporations, and so you would see a collapse of long-term investment altogether.

-------------------------
http://www.marketwatch.com/story/consumer-...ding-2009-07-24
Economic Report
Jul 24, 2009, 12:10 p.m. EST
Consumer sentiment drops in final July reading
By Robert Schroeder, MarketWatch

WASHINGTON (MarketWatch) -- U.S. consumer sentiment fell in July, according to a survey released Friday
by the University of Michigan and Reuters, dragged down by a big drop in expectations about the economy.
Sentiment [was revised to] 66.0... , but was down from the June reading of 70.8.
...
Analysts said the report highlights depressed levels of confidence as well as likely slow growth ahead.
"The July drop-back in confidence at still-depressed levels highlights the anemic pace of growth that appears likely
as we enter the early quarters of the recovery," wrote Mike Englund of Action Economics in an email.

"While off the lows that were recorded when panic and paralysis were the order of the day, this measure of consumer
sentiment nonetheless remains severely depressed," wrote Joshua Shapiro, chief U.S. economist of MFR, Inc., in an email.

Treasury prices remained lower Friday, pushing yields up, after the final reading of the index was released.
Both the current conditions and expectations readings fell in July, the survey found. Expectations plummeted to 63.2 from 69.2,
while the current conditions number dropped to 70.5 from 73.2 in June.

The weaker expectations number is a sign of consumer worry about the economy, although it is up from 53.5 back in March.
Retail stocks fell Friday along with the broader market, after online retail giant Amazon.com Inc. reported worse-than-expected
sales. RadioShack Corp. was among the few gainers after the electronics retailer received two upgrades and said it's offering T-Mobile wireless services.

It is regularly posted in here from news articles quoting the FED that it will be FIVE YEARS before the labor market begins to normalize again ...

So I'm curious as to how these WHIZ BANGS think the common folks are going to get all confident and willing to take on debt to binge spend in the face of that statistic ....

I'm staying hunkered down financially, myself ....

And so ...

We are led by those who have no experience.

No business, no war, no religion. They prize professors,
not even scientists, unless social, ethnic...I hope they gain wisdom.
The window of change is not eternal, they need counsel, very soon...
or we go back...which I will readily accept. I know that, while they do not.

If the comfort falls...I'll be closer to home. They will shoulder the confusion.
If The People reign over The Government...which they claim to want...
I'll be home...and they will be confused...and if they don't ask...I can't tell them.

An arrogance blinds them...and unless they seek to hear, they will not.

Many are called, IH, few get chosen ...

A way of the world that repeats itself over and over, generation after generation .....

Those who believe that they have the world by the teats often find that it is hard to hold ....

And they always seem to take down many when they fall ....

Don't be chosen as one going down with them ....

And so ...

I think the rewards of arrogance and hubris have come home to mighty America ....

It forgot what it was ....

And it forgot its way ....

And so ...

AND AS OBAMA WORKS TO SIMPLIFY THE FINE-PRINT FOR CONSUMERS, HIS CASH-FOR-CLUNKERS PROGRAM HAS A RULE BOOK 136 PAGES LONG ....

SO I CAN'T WAIT FOR THE MAGNUM OPUS THAT WILL LIKELY NOW ACCOMPANY CREDIT CARDS IN AMERICA ....

MAYBE THEY WILL GET THAT OUT TO FIVE HUNDRED PAGES ...

And so ...

"Fully loaded, with many options - Program offering cash for clunkers is popular, and also confusing"

By ERIC ANDERSON, Deputy business editor, Albany, New York Times Union

First published in print: Saturday, July 25, 2009

ALBANY -- The federal government's cash for clunkers program, officially called the Car Allowance Rebate System, was off to a rough start Friday morning, auto dealers report.

The program is popular with customers, with dealers reporting dozens of deals in the works.

But Donald Metzner, president of Armory Automotive in Albany, said the regulations for dealers cover 136 pages.

And Hal Talbot, general sales manager at Cooley Volkswagen Mazda in North Greenbush, said the Web site at which dealers must register for the program crashed Friday.

He has "one to two dozen" sales pending, if only he can get into the government computer.

A woman answering media calls at the U.S. Department of Transportation said she was swamped, and a spokesperson wasn't available.

"It's chaotic," said a woman who answered the phone at the Eastern New York Coalition of Automotive Retailers Inc.

"We're getting a lot of calls today from our members."

Still, dealers say it's a good program, offering $3,500 to $4,500 to a car owner who trades in a vehicle that's less than 25 years old and gets less than 18 miles per gallon.

Chrysler is offering to match the payment, giving shoppers as much as $9,000 off the price of a qualifying new vehicle.

Metzner drew attention to the program with an old car dropped into a huge dumpster in front of his Central Avenue dealership.

"I think it's a good program," said Talbot of Cooley.

"It'll definitely generate some business."

One thing the federal government is dependable on is its incompetence ....

And so ...

"Profits embolden US companies, but revenue lacking - Reality Check: Companies see profits again despite recession, but revenue still missing"

By STEVENSON JACOBS, Associated Press

Last updated: 9:45 a.m., Saturday, July 25, 2009

NEW YORK -- Corporate America is turning a profit again, but only by spending less, not making more.

While recent bullish profit reports have fueled the stock market, a true economic revival will depend on consumers opening their wallets.

So far, there's little evidence of that.

Big names such as Caterpillar, IBM, Whirlpool, Pfizer, 3M and Lowe's boosted profit forecasts for 2009 following a slew of second-quarter earning reports that blew past lackluster expectations.

Yet the gains aren't coming from sales.

Rather, companies are slashing everything from jobs to officer perks to boost the bottom line and please investors who have responded by pushing the major stock indexes to their highest levels in months.

None of this is surprising coming out of a recession.

But the increase in the major stock indexes is raising questions about whether investors are getting ahead of themselves.

Companies can only cut costs so much, and the profits and the stock surge aren't likely to last without a sustained economic recovery that puts people in the mood to spend again.

"Cost saving is not going to be the source of future earnings," said Fred Fraenkel, vice chairman of the Beacon Trust Company, an investment management firm.

"The source is going to be revenue, and that can't happen until the economy starts growing."

Many companies are taking steps that could lead to even better year-over-year earnings growth in the third and fourth quarters.

Last year, companies were unprepared for the plunge in consumer spending that followed the credit crisis and stock market collapse in September and October.

Revenue fell sharply, but there wasn't enough time to cut costs, so profits tumbled.

Now, months of cost reductions are paying off, and investors are eating it up.

The Standard & Poor's 500 stock index has shot up 44 percent since early March, while the Dow Jones industrials jumped above 9,000 Thursday for the first time since early January.

On Friday, the Dow rose 23.95, or 0.3 percent, to 9,093.24.

Edward Yardeni, an independent market analyst, said the rally is justified.

"But if all these companies do is cut costs and they can't find ways to expand revenue, all they're doing is shrinking and that's not bullish," he said.

Companies have cut spending in big and small ways.

At Google, employees no longer get free bottled water.

Starbucks, meanwhile, has shuttered hundreds of stores.

The frugality is paying off.

Of the nearly one-third of the nation's largest companies that have reported second-quarter earnings so far, 76 percent have topped analyst expectations, according to Thomson Reuters.

And despite the severity of the downturn, less than a fifth of U.S. companies are losing money, according to Cary Leahey, an economist at consulting firm Decision Economics.

"They've done extraordinary belt-tightening," he said.

For earnings to keep rising, consumers must start spending again.

And unless economic activity overseas improves, U.S. companies that do business abroad will continue to suffer, dragging down everyone.

The dismal spending climate has hurt big companies like Microsoft and Amazon.com, which reported disappointing quarterly earnings Thursday.

At IBM, layoffs, automation and other cost-cutting measures helped the company small quarterly earnings projections last week.

The revenue picture was less encouraging.

IBM's sales dropped 13 percent to $23.25 billion, below the $23.59 billion predicted by analysts.

Still, the company raised its full-year profit forecast.

"Bottom line, the changes to the company have allowed us to deliver strong performance in a tough environment," IBM chief financial officer Mark Loughridge told analysts, predicting the company will "come out even stronger when the economy improves."

Ford Motor Co. notched a $2.3 billion profit in the second quarter, a year after suffering the worst loss in company history.

The surprise gains came as the struggling Detroit automaker reduced debt and trimmed its payroll, including 1,000 blue-collar job cuts through buyout and early retirement offers.

"Without those measures, they'd be in an entirely different situation as a company," said Aaron Bragman, an analyst for the consulting firm IHS Global Insight.

He noted Ford had little choice to cut back to offset flagging sales, which fell 14 percent in June compared to the same month last year.

Even the battered banking industry is joining the earnings bonanza, with Wells Fargo & Co., Bank of America Corp. and Citigroup Inc. all posting profitable second quarters.

The gains stand in marked contrast with the stunning losses and financial market upheaval seen only six months ago.

Gone are the days when experts fretted about the possibility of another depression.

Now the talk centers on whether the economy will recover early next year, and the question is whether it will happen fast enough for many companies.

"Many companies are going to look good now," said Joe Battipaglia, market strategist for private client group at Stifel Nicolaus.

But if revenue remain flat and companies run out of ways to save money, "it becomes economic Darwinism where only the strong survive."

------

AP writers Stephen Manning and Chris Rugaber in Washington, Jordan Robertson in San Franscisco and Daniel Lovering in Pittsburgh contributed to this report.

AND IN THE MEANTIME, BASED ON AN ILLUSION, THE SPECULATORS ARE STARTING ANOTHER BUBBLE WITH RESPECT TO OIL PRICES ....

AS THE GOOSE WHO LAID THE GOLDEN EGG LAYS THERE LIMP AND TWITCHES, THEY ARE GOING TO GIVE ITS NECK ANOTHER GOOD CHOKE TO FORCE IT TO LAY SOME MORE GOLDEN EGGS FOR THEM ....

And so ...

"Oil rises above $68 as rally extends to third week - Oil rises above $68 in Asia as economic recovery hopes fuel 3-week rally"

By ALEX KENNEDY, Associated Press

Last updated: 6:35 a.m., Monday, July 27, 2009

SINGAPORE -- Oil prices rose above $68 a barrel Monday in Asia as a rally fueled by an improving economic and corporate outlook extended into a third week.

Benchmark crude for September delivery was up 52 cents to $68.57 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.

On Friday, the contract rose 89 cents to settle at $68.05.

Oil has rebounded from $58.78 a barrel earlier this month as stronger economic results from the U.S. and China boosted investor optimism.

The Dow Jones industrial average has risen about 11 percent during the last 10 days.

"Oil is completely mirroring equity markets," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore.

"There's less risk aversion so more investment in commodities."

Many companies have reported better than expected second quarter company results, bolstering investor sentiment that the worst of a severe global recession is over.

But U.S. gasoline demand so far this summer has remained weak, raising doubts about whether the economy can emerge this year with a strong recovery.

"I think a lot of the green shoots we've seen over the last few month have a lot to do with the government stimulus which are eventually going to run out," Kornafel said.

"The fundamentals should definitely have us lower."

In other Nymex trading, gasoline for August delivery rose 2.01 cents to $1.94 a gallon and heating oil gained 1.86 cents to $1.80.

Natural gas for August delivery fell 6.8 cents to $3.63 per 1,000 cubic feet.

In London, Brent prices rose 52 cents to $70.84 a barrel on the ICE Futures exchange.

It's time to do some personal financial review...
yup, look into your own bank and see what they
are holding as "assets"...

http://money.cnn.com/2009/07/24/news/econo...sion=2009072709

Get ready for banking's next headache
A weak economy and frozen financing markets could spell trouble
for regional banks with big commercial loan portfolios.

By Colin Barr, senior writer
Last Updated: July 27, 2009: 9:20 AM ET

NEW YORK (Fortune) -- Regional banks can no longer ignore the elephant in the room --
their exposure to the commercial real estate bust.

Though housing markets remain weak, analysts expect credit problems over the next year
to center on commercial real estate -- mortgages on office and apartment buildings and
shopping malls, as well as construction, development and industrial loans.

U.S. banks hold some $1.8 trillion worth of commercial loans, according to Federal Reserve data.
Big regional banks, including PNC (PNC, Fortune 500) of Pittsburgh, KeyCorp (KEY, Fortune 500)
of Cleveland and BB&T (BBT, Fortune 500) of Richmond, Va., have more than half their loan
books in commercial loans.

With financing markets locked up and the economy still mired in recession -- unemployment
is at a 26-year high while capacity utilization, a key measure of industrial production, recently
hit a record low -- observers fear a wave of loans will go bad in coming quarters.
...

I know, I know if you have less than $250,000 per account the FDIC gaurantees your
deposits. But, after closing more than 60 banks THIS YEAR...the FDIC (like Treausury
and The Fed) have their limits - or at least should so they don't crash the overall economy.

I have my little money in a state-based, federally-chartered credit union without commercial
real estate on it's books...but I still watch it. Don't get caught standing if the music stops...
know where the closest chair is.

For those ready to believe "green shoots" and "the fire is out"...

The Market Ticker
Commentary On The Capital Markets
Sunday, July 26. 2009
Posted by Karl Denninger in Federal Reserve at 22:54

Bernanke Dissembles; The Economy Burns

You didn't really expect Bernanke to go quietly into the night without trying
to "rescue" his legacy, did you?

“The problem we have is that in a financial crisis, if you let the big firms collapse
in a disorderly way, it will bring down the whole system,” Bernanke said today
at a town- hall-style meeting in Kansas City, Missouri, taped for broadcast on
PBS television this week. “I was not going to be the Federal Reserve chairman
who presided over the second Great Depression.”

No Ben, the problem we have is that when you fail to do your job for the entirety
of the time you have it, that is, policing the safety and soundness of the banking system,
putting a stop to predatory, impossible-to-pay loans such as OptionARMs and ridicuous
commercial real estate lending, blatantly false and "bought" ratings and every other
manner of credit pumping, you find yourself sitting on the precipice of implosion -
which you then used to justify even more idiotic credit creation and lies.

Let's face reality right here:





This is the problem.

In 1981 the total outstanding private debt was somewhere around $4.5 trillion.
Today it is somewhere around $53 trillion.

That's about $50 trillion of GDP that got added to the system over a period of about
30 years, all of which was "false" GDP - that is, pulled-forward demand.

Most important is the SLOPE of that graph and the fact that Ben Bernanke was part
of The Federal Reserve during the entirety of the acceleration in the move beginning with the 2000 recession.

The crisis erupted because of that graph - we "hit the wall" and were unable to service
any more debt. That is why the system came close to collapse.

Now let's face the ugly truth: We can't keep piling up more debt to pull forward more GDP.
We can't add $2 trillion or more a year to debt as a means of doing this, but that's what
The Government is now attempting since private credit has actually contracted for the
first time in modern (post-war) history.

It won't work and it can't work.

Therefore GDP must contract to a sustainable level.

Bernanke's "tonic" is to allow financial institutions to lie with the premise that if they lie
for long enough they can "earn their way out" - that is, charge you 30% interest rates
on your credit cards and slowly but surely retire all that excessive debt.

The problem with that is the amount of time required. There is at least $2 trillion of additional
bad housing-related debt on the books (we've written down $1 trillion or so of it) and then
you've got credit cards and commercial real estate. The former we've probably taken care
of 1/3rd of what has to be done, the latter almost none of it.

Nobody wants to face the facts here but the math cannot be argued with. To get rid of $5 trillion
worth of bad paper (a rough estimate of what remains) we would have to slice $500 billion off
GDP for the next ten years. That's 3% or so - for ten years. Or we could do it in five years, at a 6% penalty.

This of course does not take into account the contribution that this debt accumulation has made
to GDP, which has already disappeared. How much impact has this made? Likely 3-4% on its
own, which is why we're printing negative numbers now.

If you are betting on an economic recovery - an actual recovery mind you, which is what the
stock market is pricing in - you're betting that the banks can "earn their way out" without any
impact on GDP forward, and that without the excess credit creation GDP can advance.
Alternatively, you believe that the US Government can add $2 trillion to the Federal Debt
this year, $2.5 trillion next year, $3 trillion the year after that and so on, replacing private credit expansion.

Now tell me folks - do you really believe that? Do you believe that within the next five years we
can sell $200 billion of T-bills a week, every week?

Do you believe that the consumer only had to de-leverage by 2.5% - all he has so far according
to Fed statistics - and that a mere 2.5% in excess debt leverage was enough to collapse the entire system?

No?

Well that's the bet you're making by believing in a durable market and economic recovery.

It is one thing to play the market for a bounce, or a dive. It is another to invest for the
long term on the premise of economic growth and prosperity - that is, a durable economic recovery.

The former is always a play you can make (up or down) at any point in time. The latter
is absolutely unsupportable given the facts - you need nothing more than the above graph
and public GDP data to "get it", and every single person involved in policy-making, at The Fed
and in Washington, knows the truth.

Bernanke is, to be blunt, afraid. He's afraid that he's going to get tattooed with (justified)
responsibility for what has happened. For the unbridled and fraudulent expansion of credit
vastly beyond what was sustainable. For refusing to remove the punch bowl in 2004, 2005
and especially 2006 when he took the helm of The Fed. For refusing to tell the truth. For
refusing to lock down the predatory lending. For refusing to force market prices to be taken
on everything, top to bottom, in 2006 and 2007.

No ladies and gentlemen, Ben Bernanke didn't "avert" something that just happened to occur,
he engineered the mess himself and now is attempting to claim to be a savior, much as a fireman
who commits arson calls himself hero when he puts out the very fire he set!

Beyond the obvious - that he set the fire in the first place - there is the secondary problem in
that the building may no longer be burning, but it has been consumed by the fire and is no
longer suitable for inhabitation.

Don't believe the hype and lying coming from our so-called "savior": The math is never wrong,
and Bernanke is well-aware of his personal culpability, never mind the fact that his so-called
prescription cannot work as he intends.
-----------------

Protect yourselves good people, protect yourselves...

SPEAKING OF ALL OF THESE BERNANKE-AN GREEN SHOOTS ....

I THINK IT IS JUST LUMPS OF BULL**** THAT HE PAINTED GREEN WITH SOME CHEAP SPRAY PAINT ....

And so ...

"Coal producers cope with sluggish demand - Coal producers ICG, Alpha and Foundation cut production further to cope with sluggish demand"

By TIM HUBER, Associated Press

Last updated: 2:05 p.m., Monday, July 27, 2009

CHARLESTON, W.Va. -- Coal producers are making further cuts in production as the recession throttles demand for energy and steel, undermining second quarter sales and profits, three of the nation's largest producers said Monday.

Abingdon, Va.-based Alpha Natural Resources blamed the weakness for a 77 percent decline in its second-quarter profit.

Rivals Foundation Coal Holdings and International Coal Group said they continued to reduce production because electric utilities are unwilling to take more deliveries and have stopped buying thermal coal on the spot market altogether.

Alpha said it earned $15.4 million, or 22 cents per share, in the quarter, down from $67.1 million, or 94 cents per share, a year earlier.

Coal revenue dropped to $333.9 million, from $604.7 million.

Analysts polled by Thomson Reuters expected, on average, Alpha to report a profit of 38 cents per share on revenue of $446.3 million.

Linthicum Heights, Md.-based Foundation said it earned $30.7 million, or 67 cents per share, in the quarter, including $4.8 million in one-time, pretax expenses related to a proposed $1.4 billion takeover by Alpha.

Foundation lost $4.4 million, or 10 cents per share, in second-quarter 2008.

Analysts were expecting 71 cents per share on $445.2 million in revenue.

Scott Depot, W.Va.-based ICG said it earned $10.4 million, or 7 cents per share, compared with $13.8 million, or 8 cents per share, in second-quarter 2008.

ICG said the 2009 results included a non-cash $7.7 million gain related to terminating a coal sales deal, while the second-quarter 2008 numbers included a $24.6 million gain on a property swap.

Revenue from operations in West Virginia, Kentucky, Maryland, Virginia and Illinois was essentially flat at $277.8 million, compared with $277.9 million in 2008.

Analysts were predicting 2 cents per share on $307.33 million in revenue.

All three saw demand falter, though they continued to benefit from contracts signed in 2008, when prices more than doubled in some cases.

ICG Chief Executive Ben Hatfield told analysts during a conference call that there are signs the market is stabilizing.

"We are cautiously optimistic that the bottom of the market was reached in mid-April," Hatfield said.

"Coal demand remains very weak and meaningful thermal production recovery may not occur until 2010."

"We expect the coal producers will continue to curtail production."

Foundation, for instance, said its coal sales dipped to 16.4 million tons from 17 million tons and coal sales revenue declined to $399 million from $404.8 million a year earlier.

The amount of money Foundation received per ton sold rose 19 percent in central Appalachia, 18 percent in northern Appalachia and 7 percent in Wyoming.

Costs, meanwhile, dropped $50.8 million to $279.5 million, from $330.2 million in second-quarter 2008.

ICG said it shipped 600,000 fewer tons than expected during the quarter and slashed production 1.4 million tons.

Foundation, which said it's negotiating with utilities that want to delay deliveries, further reduced production plans.

Foundation now expects to produce between 68.5 million and 71.5 million tons in 2009, down from an earlier range of 70 million to 73 million tons.

Alpha and Foundation, whose shareholders are due to vote on their proposed deal Friday, also offered optimistic comments from executives.

Combined, Foundation and Alpha would be the nation's third-largest coal producer, with mines in Pennsylvania, West Virginia, Virginia, Kentucky and Wyoming.

Alpha chief Mike Quillen said the company is seeing reasons for hope.

"We have seen encouraging early signs of a turnaround in the steel markets and renewed interest from coal buyers, which had been mostly absent to this point."

AND THEN ...

THERE IS THE BOND MARKET ...

And so ...

"Worries about influx of supply pressures Treasurys - Treasurys fall amid jitters over influx of supply; more than $200B of debt to be auctioned"

By SARA LEPRO, Associated Press

Last updated: 5:25 p.m., Monday, July 27, 2009

NEW YORK -- Prices of government bonds fell Monday ahead of another round of Treasury auctions as traders worried that the latest issues might be met with weak demand.

The government is auctioning off a record $205 billion of debt this week, including $115 billion in two, five and seven-year notes.

"The safest thing is to stay on the sidelines until some of these things are priced," said Mike Wallace, global market strategist at Action Economics.

On Monday, the Treasury auctioned off $32 billion of three-month bills and $31 billion of six-month bills to decent demand, however bill auctions occur weekly and aren't as closely watched as auctions of longer-term Treasurys.

Still, the steady demand for short-term debt shows that there is enough uncertainty over the direction of the economy and the stock market, said Kim Rupert, Action Economics' managing director of global fixed income analysis.

"Bills are really a parking place," she said.

An auction of $6 billion of 20-year Treasury Inflation-Protected Securities, or TIPS, was also met with solid demand.

Investors have been keenly focused on long-term Treasury auctions this year, wary of any sign that demand, especially from foreign governments, might be waning.

The U.S. government is relying on successful auctions to help fund its stimulus programs, but with the debt load expected to reach $1.84 trillion this year, some investors are concerned that demand will fall off.

If that were to happen, the government would be forced to raise the returns on bonds to attract investors.

That in turn could hike up interest rates on mortgages and other types of loans that are closely tied to long-term Treasury yields, potentially choking off a recovery.

Auctions have been going fairly smoothly so far this year, but even one auction doing poorly could put pressure on the market, analysts say.

The auctions this week come as Chinese officials begin two days of high-level talks with the Obama administration in Washington.

China holds $801.5 billion of U.S. Treasury debt, more than any other foreign nation, and officials are looking for reassurance that those holdings are safe and won't be jeopardized by inflation.

Rising prices are bad for Treasurys because they eat into their fixed returns over time.

Wallace said investors will be keeping a close watch on the discussions for any signs of strain between the two countries.

"Any comments that are shot from the hip could affect Treasurys or the auction process," he said.

In late trading, the benchmark 10-year Treasury note fell 16/32 to 95 3/32.

Its yield rose to 3.73 percent from 3.66 percent late Friday.

The 30-year bond fell 1 9/32 to 93 30/32, and its yield jumped to 4.63 percent from 4.54 percent.

The two-year note slipped 2/32 to 100 5/32, while its yield rose to 1.05 from 1.01 percent.

The yield on the three-month T-bill was unchanged at 0.18 percent.

Its discount rate stood at 0.19 percent.

You know what I think, IH?

Probably not, since you are not a mind-reader, so I will tell you ....

What I think is that some snot-nose kid named Barack Hussein Obama stepped up to the plate here in OUR America, and he told us that he could hit a bunch of home runs ...

And you know what?

I'm waiting to see if the kid is as good as what his mouth says he is ....

And if he fails, I'm going to remind him of that fact every day ....

This America of today is NOT the America that I grew up in ....

It reminds me more of biblical Babylon than it does anything else, and I'm not a Babylonian ....

So I'm not standing where the tower or its pieces will hit me when it falls ...

Did you ever notice that every church in America that you go into, they always have Jesus nailed to the cross?

Did you ever notice them, each and every day, checking those nails to see if they are still holding?

And so ...

MARKETWATCH Bond Report

Jul 28, 2009, 2:52 p.m. EST

"Two-year Treasurys slip after lackluster auction - Falling stocks and gloomy consumer-confidence data boost other maturities"

By Laura Mandaro & Polya Lesova, MarketWatch

SAN FRANCISCO (MarketWatch) -- Two-year Treasurys reversed lower after Tuesday's record auction received weaker demand than the government received last month, bucking gains along much of the yield curve.

Yields on the two-year note rose 2 basis points to 1.096%, up from 1.0055% ahead of the auction.

Prices, which move inversely to yields, fell.

Short-term bills and longer-term notes and bonds stayed higher or unchanged with the prior day, helped by falling U.S. stocks and gloomy data on consumer confidence, which boosted the appeal of government debt.

Ten-year note yields edged off earlier lows and were nearly flat at 3.718%.

A basis point is 1/100th of a percentage point.

Tepid demand

The U.S. Treasury Department said Tuesday it sold $42 billion in 2-year notes to demand that paled with the prior month's auction.

The Treasury awarded the notes at 1.08%, down from last month's 1.151%.

The bid-to-cover ratio -- which measures bids received to bids tendered -- fell to 2.75 from 3.19 last month.

"At first blush, this is certainly a mixed auction," said Dan Greenhaus, market strategist at Miller Tabak, in emailed comments.

He noted that the "bid-to-cover was still pretty healthy, although off of recent levels, but the percentage participation by indirect bidders plummeted."

The indirect bid, a carefully watched category that includes foreign buyers, fell to 33% from 69% in the June auction.

Investors have been sensitive to signs that foreign countries may pare their purchases of Treasurys, driving up interest rates.

The two-year sale was the second of four long-term debt auctions this week.

Including bills, the U.S. government plans to sell a record $235 billion this week.

'Bargain hunters'

Worse-than-expected data on consumer confidence earlier buoyed gains in the Treasury market as investors snapped up beaten down securities.

"We're seeing some bargain hunters."

"The market's cheapened up enough," said Kim Rupert, managing director of global fixed-income analysis at Action Economics.

The 10-year note's yield claimed its highest level in about five weeks on Monday.

"Stocks are lower, so we're seeing the interplay between stocks and bonds, with some profit-taking in the stock market after solid gains," she said.

U.S. stocks registered mild losses in afternoon trading.

The S&P 500 index fell 0.6% to 976 points and the Dow Jones Industrial Average dropped 0.4%, or 36 points, to 9,073 points.

On Wednesday, the U.S. government plans to sell $39 billion in 5-year notes, followed by $28 billion in 7-year notes on Thursday.

The amount of 2-year, 5-year and 7-year notes were slated as the largest-ever auctions on record.

Yields on 30-year Treasury bonds pared their losses.

They were down 5 basis points to 4.57%.

Demand for bills

Setting a positive note ahead of the 2-year sale, the Treasury Department said it sold $27 billion in 52-week bills to strong demand.

Bidders offered $106.7 billion, representing a bid-to-cover ratio of 3.95, for the bills carrying a yield of 0.47%.

Indirect bidders, a closely watched category that includes foreign central banks, bought 68%.

The Treasury also sold $30 billion in 4-week bills, at yields of 0.13%, for a bid-to-cover ratio of 3.54.

Indirect bidders took 19%.

Yields on the one-month T-bill edged up to 0.1369%.

Yields on the 1-year bill were flat at 0.4429%.

Worse-than-expected data on consumer confidence reported earlier buoyed gains in the Treasury market.

Consumers' confidence took its second consecutive monthly drop in July, the Conference Board reported, dropping to 46.6 from an unrevised reading of 49.3 in June.

Bond traders also digested some positive news about the housing market.

U.S. home prices rose on a monthly basis for the first time since July 2006, according to the national Case-Shiller home price index released by Standard & Poor's.

Home prices in 20 selected metropolitan cities rose 0.5% in May compared with the previous month.

On a year-to-year basis, however, home prices fell 17.1%.

Still, this was slower than the comparable 18.1% pace of decline seen in April.

Laura Mandaro is a reporter for MarketWatch in San Francisco.

Polya Lesova is a New York-based reporter for MarketWatch.

http://www.marketwatch.com/column/Bond%20Report

The alternative to the snot-nose kid that got the job of American president this time around was an old man of questionable mental capacity and an untrustworthy air-headed ditz ....

And so ...

"Job worries persist; Americans gloomy on economy - Consumer confidence falls again as Americans keep fretting about job security"

By ANNE D'INNOCENZIO, Associated Press

Last updated: 4:25 p.m., Tuesday, July 28, 2009

NEW YORK -- Americans are looking past the stock market surge and signs of a stabilizing economy and focusing on something more personal -- job worries.

Consumer confidence fell this month, the Conference Board said Tuesday, presenting a big obstacle for already hammered stores as they head into the critical back-to-school shopping season.

The confidence index fell to 46.6, down from 49.3 in June and weaker than what economists were expecting.

It takes a reading above 90 to signal Americans believe the economy is on solid footing.

The disappointing figure followed an upbeat report offering more evidence that the real estate market is showing signs of life.

According to a widely watched index, home prices in May posted their first monthly increase since the summer of 2006.

But vanishing job security and reduced work hours continue to plague shoppers, who are relying more on their paychecks as two previous sources of money -- credit cards and home equity loans -- have shrunk.

When the Labor Department releases its monthly jobs report next week, economists expect it to show unemployment climbed to 9.7 percent in July, up from 9.5 percent in June and within shouting distance of its post-World War II high.

And the job cuts keep coming.

Just Monday, Verizon Communications Inc. announced plans to slash more than 8,000 employee and contractor jobs before the end of the year.

Irma Sanches of Milwaukee was once a big spender.

But now the 25-year-old single mother is having trouble finding a job that offers her flexibility to take care of her infant daughter.

She was looking at toys at TJ Maxx on Tuesday but trying not to spend money.

"I'm a shopper, and right now I'm restricted to what I need," said Sanches.

The weak consumer-confidence reading also pushed stocks lower.

The Dow Jones industrial average finished down about 12 points at 9,097.

Over the past two weeks, better-than-expected earnings reports have reignited the stock market rally.

The average topped 9,000 Thursday for the first time since early January, but worries about the economy are putting the rally on hold again.

Americans' lack of confidence presents a big hurdle for retailers because consumer spending accounts for more than 70 percent of economic activity.

Confidence had been rebounding since March after reaching historic lows.

Now, harsh economic realities are catching up with shoppers again.

"Even though we have seen an improvement in economic indicators, there hasn't been any meaningful improvement in household finances," said Mark Vitner, senior economist at Wells Fargo.

"Consumers are not in the position to step up their spending in a major way."

"This doesn't bode well for the back-to-school season."

Frank Newport, editor-in-chief of the Gallup Poll, said recent surveys have picked up growing skepticism among Americans about the government stimulus plan, hurting confidence.

Both components of the Conference Board's consumer confidence gauge -- one that measures shoppers' current assessment of the economy and another that measures shoppers' outlook over the next six months -- further declined from last month.

The consumer confidence survey was sent to 5,000 households and had a cutoff date for responses of July 21.

The encouraging news is that the housing market, while far from healthy, is showing some signs of stabilizing.

The Standard & Poor's/Case-Shiller home price index of 20 major cities rose slightly in April but is still well below levels of a year ago.

Thirteen cities showed monthly increases, with the best results in Cleveland, Dallas and Boston.

On Monday, the government said new home sales increased last month at the fastest pace in more than eight years as buyers took advantage of bargain prices.

But economists believe an improving job picture, not housing, is the vital factor in boosting confidence and getting people spending again.

Jen Ferguson of Milwaukee feels fairly secure in her job as a city planner, but she'll watch closely as budget talks get under way this fall.

She recently bought a condo and said she's had to watch her spending habits.

"It's not a total stop, but I'm waiting to know if I have the money before I spend it," she said.

Vitner said he doesn't believe that the job market will begin to bottom out until mid-2010 and doesn't expect confidence to return to healthy levels until 2011 or 2012.

"We are going to have a slow and frustrating climb out of this recession," he said.

------

AP Real Estate Writer J.W. Elphinstone in New York and AP Retail Writer Emily Fredrix in Milwaukee contributed to this report.

Green shoots to the right of us ...

Green shoots to the left ....

Green shoots all around us ...

And so ....

Has anybody actually seen any of these green shoots, anywhere?

Or is it all just a lot of HYPE?

And so ...

"Feds push mortgage companies to modify more loans - Officials ramp up pressure on mortgage companies after sluggish start to foreclosure program"

By DANIEL WAGNER, Associated Press

Last updated: 2:35 p.m., Tuesday, July 28, 2009

WASHINGTON -- Administration officials want mortgage companies to have 500,000 trial loan modifications in the works by Nov. 1.

About 200,000 borrowers currently are enrolled in trial loan modifications under a $50 billion administration program.

That is far off target from President Obama's prediction in March the program would ultimately reach 3 to 4 million homeowners.

In a meeting Tuesday, officials from the Treasury Department, Department of Housing and Urban Development and Federal Housing Administration pressed executives from 25 companies to improve their efforts to offer more homeowners lower monthly payments.

The companies will receive incentive payments for each borrower they help.

"Treasurys pare gains following lackluster auction - Treasurys pare gains as demand at auction of $42 billion of two-year notes falters"

By SARA LEPRO, Associated Press

Last updated: 2:45 p.m., Tuesday, July 28, 2009

NEW YORK -- Treasury prices were giving up some of their gains Tuesday after a lackluster auction of $42 billion of two-year notes.

Overall demand was weaker than at a similar auction in June, and foreign investors appeared to buying fewer notes.

The government is relying on central banks around the globe to buy its debt and help fund its economic stimulus programs, so a drop off in foreign demand is worrisome.

The price of the two-year note, which had been holding steady ahead of the auction, turned lower following the announcement of the results, while longer-term Treasurys came off their earlier highs.

The auction's bid-to-cover ratio, a measure of demand, was 2.75 percent compared with 3.19 percent at an auction of two-year notes in June.

Indirect bids, an indication of foreign buying, dropped to 32.97 percent of the total bids accepted from 68.74 percent in June.

"As of this moment, the safe havens are not as attractive," said Jessica Hoversen, a fixed income and foreign exchange futures analyst with MF Global in Chicago.

"I think the market is still very cautious and there are still questions over economic growth, but people are more willing to take risk now than they were back in the fall or even in the first quarter of this year."

In early afternoon trading, the two-year note slipped 3/32 to 100 2/32, while its yield rose to 1.10 from 1.05 percent late Monday.

The benchmark 10-year Treasury note rose 1/32 to 95 5/32.

Its yield fell slightly to 3.72 percent from 3.73 percent.

The 30-year bond rose 12/32 to 94 10/32, and its yield fell to 4.60 percent from 4.63 percent.

The yield on the three-month T-bill was unchanged at 0.18 percent.

The auction came at the start of a week of record Treasury note issuance, in which the government is auctioning off $205 billion of debt.

Investors fear that the vast amounts of debt being issued by the government to fund its economic stimulus programs will outrun demand.

That in turn would force the government to increase the returns on bonds to make them more attractive to investors, and the higher yields will affect interest rates throughout the economy.

Long-term Treasury yields are tied closely to interest rates on mortgages and other consumer loans, so a spike in rates could saddle consumers with higher borrowing costs at a time when rising unemployment and the recession are putting a strain on their finances.

Earlier in the day, the Treasury issued $30 billion of one-month bills and $27 billion of one-year bills.

Both auctions were well received, particularly the one-year bills that saw solid demand from foreign investors, said Tom di Galoma, head of fixed income rates trading at Guggenheim Partners.

That followed auctions on Monday of three and six-month bills, and 20-year Treasury Inflation-Protected Securities, or TIPS, that were met with decent demand.

Nonetheless, Treasury prices slipped Monday because of fears that auctions of longer-term Treasurys later in the week won't see as much demand.

Investors tend to put more weight in auctions of longer-term Treasurys rather than bills, since those auctions are weekly.

The mixed trade in Treasurys Tuesday came amid a moderate sell-off in stocks, which was sparked by a weaker-than-expected reading on consumer confidence.

The market sees a drop in consumer confidence as troubling because that means Americans are likely still keeping their spending in check.

Consumer spending makes up more than two-thirds of U.S. economic activity.

Analysts have been anticipating a pullback in stocks after major indicators jumped 11 percent in just two weeks, driven by a stream of better-than-expected corporate earnings reports.

Can you block out the incessant noise being blared at you
by the MSM, politicians and social engineers? If so read on...

The State/Muni Budget Collapse
�� US state tax revenues collapsed by 11.7% YoY, the largest decline since the
records were first kept 46 years ago
�� 45 of 50 states reporting tax revenue decline
�� Rockefeller Institute of Government estimates are pointing to a 20% slide in
the second quarter!
�� The cumulative state budget funding gap for 2010 is $146 billion: Obama’s
Stimulus is not working at the state level
�� California was the first “bankrupt” state, and the threat is spreading:
�� State governors are scrambling — in Illinois, Governor Quinn attempted to raise
taxes but his proposal was shot down
�� Instead the state is facing deep spending cuts - a 14% slice to social services.

Household Taxation
�� There are three tax increases on upper-income households that are now
being proposed by the Administration and House Democrats to cover the
health care plan, Social Security and deficit reduction.
�� If these proposals live to see daylight, by 2011, we will see the top marginal
tax rate jump 10 percentage points to 45%, back to where it was 30 years
earlier
�� Reagan’s lesson is now completely forgotten
�� Obama’s Healthcare plan is a wealth redistribution mechanism

The full report:

The End of The End of The Recession.

Be warned...while filled with official data, charts and graphs...it ain't pretty.
I'm getting closer and closer to dropping off the radar, which I believe bro Tom has already.

Reagan RAISED taxes not lowered them
a little lie though never hurt your soundbyte, eh?

Mitt Romney was almost tripped up by a gotcha dontchaknowitbabe?

Your tax dollars at work...

http://www.bloomberg.com/apps/news?pid=206...id=app2K2WiOq0M

Property Bond Sales May Resume With $3 Billion
By Hui-yong Yu and Sarah Mulholland

July 29 (Bloomberg) -- Commercial property companies may sell about $3 billion of mortgage-backed bonds
starting in September as part of the U.S. program to revive lending for shopping malls, skyscrapers and hotels.

More than a dozen real estate investment trusts are likely to participate in the Federal Reserve’s Term
Asset-Backed Securities Loan Facility, or TALF, said Steven Wechsler, chief executive officer of the
National Association of Real Estate Investment Trusts. Vornado Realty Trust may raise as much as $600 million,
a person familiar with the matter said yesterday.

The transactions would be the first new issues in the $700 billion U.S. market for commercial
mortgage-backed securities since it shut down in 2008 as credit markets froze. Commercial
property values tumbled and defaults accelerated. REITs turned to the stock market to raise capital to pay debt.

“If the first deals are successful, we think we can get $10 to $25 billion done in the next six months,”
said Kenneth Rosen, who runs a $310 million hedge fund in real estate securities and heads the
University of California’s Fisher Center for Real Estate and Urban Economics in Berkeley. “The current pipeline is about $3 billion.”

The central bank started TALF in March to help thaw credit by lending to investors who want to buy
securities backed by auto and credit card loans. The $1 trillion program was expanded to include
bonds backed by commercial mortgages. Investors who buy the securities submit them to TALF
as collateral and the government lends the investor a percentage of the purchase price, subsidizing the investment.

Colony’s Plans

Only top-rated securities will be accepted and loans on CMBS purchases must be repaid within five years.

Investors including Morgan Stanley and Colony Capital LLC are raising money to take advantage of TALF.
Morgan Stanley completed a $600 million fund this month, mainly to buy auto, credit card and student loans
rather than commercial property bonds. Colony Financial Inc., a new real estate finance company that will
acquire, originate and manage real estate-related debt, filed to raise as much as $500 million by selling shares.

The Fed is expected to lend CMBS buyers up to 85 percent of the purchase price for TALF securities, said Nareit’s Wechsler.

That may limit the program’s effectiveness. Many landlords already owe more than their property is worth.

...

I'm invested heavily into canned goods and ammo!
I'll be hanging on to my Bible also..

ARE THE TIMMY'S BOND SALES STARTING TO HIT A WALL?

MARKETWATCH Bond Report

Jul 29, 2009, 3:33 p.m. EST

"Treasurys turn down after weak 5-year note auction"

By Deborah Levine, MarketWatch

NEW YORK (MarketWatch) -- Treasury prices turned lower on Wednesday, pushing yields to 5-week highs, after the government received lackluster demand at its sale of a record amount of 5-year notes, the third of four big debt sales this week.

Treasurys, whose prices move inversely to yields, had been higher in earlier trading after the government reported that orders for durable goods sank more in June than economists expected.

Yields on the 2-year note rose a third day, by 4 basis points to 1.17%.

It earlier touched 1.24%, the highest on a closing basis since June 18.

A basis point is the equivalent of 0.01%.

Longer-dated yields slipped back down after Federal Reserve officials said the economy remains weak but the recession is becoming less severe.

Yields on benchmark 10-year notes declined 2 basis points to 3.66%, after briefly touching the highest in more than five weeks.

The Treasury Department sold $39 billion in 5-year notes at a yield of 2.689%, lower than last month's level but above what traders had anticipated right before the auction.

Bidders offer $1.92 for every $1 of 5-year notes sold, the lowest since September and compared with an average of $2.37 at the last three sales of the securities.

Indirect bidders, a closely watched class of investors that includes foreign central banks, took 36.7% of the sale, the lowest since April's sale.

The June indirect bidding statistics for all auctions were pushed up substantially due to a change in how bids were tabulated.

Analysts have paid more attention to the government's debt sales in the past few months in search of signals about the willingness of investors, particularly sovereign funds, to buy U.S. debt.

Yields on the current 5-year note rose 3 basis points to 2.64%.

On Tuesday, Treasurys came under pressure after the government's auction of $42 billion of 2-year notes met with less overall demand from bidders than the prior month's sale of the same maturity.

Indirect bidders bought 33% of the 2-year sale, down from 69% in the June auction.

Today's 5-year auction was eerily similar to yesterday's 2-year auction in the way it surprised to the downside," said strategists at Morgan Stanley led by James Caron.

"There were no positives at this 5-year auction."

The Treasury will also offer $28 billion in 7-year notes on Thursday, its last sale of the week that has brought a record $235 billion in short-term bills and longer-term debt.

The amounts of 2-year, 5-year and 7-year notes are the largest ever for the Treasury.

Earlier this week, the so-called bid to cover ratio at a sale of 20-year, inflation-linked securities was the highest ever.

Treasurys remained lower Wednesday after the Fed's collection of economic anecdotes known as the Beige Book said bank lending and retail sales remained weak, while commercial real estate was slow.

The report is used by Fed policy makers, who next meet on August 11-12.

Analysts were looking for the extent to which it notes actual growth or the expectation of growth in 2009, T.J. Marta, chief strategist at Marta on the Markets, wrote in a note before the release.

Supportive data, Fed buyback

Bonds were supported in earlier trading after the Commerce Department announced that orders for U.S.-made durable goods dropped 2.5%, the largest decline since January and following two straight months of gains.

The decrease far exceeded the expected 0.6% fall forecast by economists surveyed by MarketWatch.

Excluding transportation goods, June's orders rose 1.1%.

Still, the report suggests "the economy is still searching for a bottom," said Steven Ricchiuto, chief economist at Mizuho Securities.

Also supporting U.S. debt earlier, the Federal Reserve Bank of New York bought $2.999 billion in Treasurys maturing between 2021 and 2026, its latest operation in a program intended to keep a lid on borrowing costs for individuals and businesses.

Dealers submitted $11.707 billion to the central bank to buy.

The amount purchased was the same as at the Fed's last buyback in the same maturity range.

Separately, New York Fed President William Dudley said there will likely be moderate growth in the U.S. economy during the second half of the year.

However, concerns that the Federal Reserve will let inflation get out of control are misplaced because the central bank has the tools to keep its expanded balance sheet from triggering a spike in prices, he said in a speech to the Association for a Better New York.

The Fed's new power of paying banks interest on reserves will limit the amount of credit in the system, according to Dudley.

The Fed's term asset-backed securities loan facility, or TALF, is working to reduce credit spreads on consumer loans, but Dudley declined to comment on whether the program will be extended past this year.

He also indicated it's unlikely the Fed will expand its purchases of Treasury or mortgage-related assets.

Deborah Levine is a MarketWatch reporter, based in New York. Nick Godt in New York contributed to this report.

http://www.marketwatch.com/column/Bond%20Report

"Energy prices slide as unused crude piles up - Oil below $64 on falling consumer confidence, weak US demand"

By CHRIS KAHN, Associated Press

Last updated: 2:55 p.m., Wednesday, July 29, 2009

NEW YORK -- Oil prices sank nearly 6 percent Wednesday, the largest drop in more than three months, with more signs emerging that consumers are cutting back on energy costs.

Benchmark crude for September delivery fell $3.88 to settle at $63.35 a barrel on the New York Mercantile Exchange.

In London, Brent prices lost $3.14 to $66.74 a barrel on the ICE Futures exchange.

The summer driving season has been a bust for industries that rely heavily on summer travel because Americans are staying very close to home.

Industries have cut back as well, shuttering factories that consume a lot of energy and laying off workers.

Consumer confidence has been rattled, even though there are some indications of improvement in areas like housing.

Oil prices haven't seen a one-day drop like this since April 20, when crude fell nearly 9 percent in one day.

Crude prices staged a two-week rally earlier this month, but that was tied to a parallel rise in the stock market and general enthusiasm that the economy was healing.

The continued glut in oil, combined with weak demand for heating oil, jet fuel and other petroleum products, shows how much the strain there is on the economy, said Andrew Lebow, senior vice president and broker at MF Global.

On Wednesday the government reported that orders to U.S. factories for big-ticket durable goods plunged in June by 2.5 percent, the largest amount in five months.

The figure was much larger than the 0.6 percent decline economists had expected and was the biggest setback since a 7.8 percent fall in January.

Early in the recession, consumers began cutting back on energy costs, and that has continued throughout the year.

The Energy Information Administration reported Wednesday that crude supplies in the U.S. grew by 5.1 million barrels.

That's about 18 percent above last year's levels, showing how much unwanted crude is in storage.

The Federal Highway Administration recently reported that demand has edged slightly higher for gasoline, given that gas is so much cheaper than last year.

But the shift in behavior by motorists this summer is clear.

Gasoline supplies have risen by 11.4 million barrels over the past six weeks.

Still, refiners are cutting back to match falling demand.

The government is set to report natural gas inventories on Thursday.

Analysts expect U.S. stockpiles to grow even more.

At the pump, gas prices have climbed for a week, adding less than a penny overnight to a new national average of $2.511 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

Regular unleaded gas peaked in June, and a gallon is 12.8 cents cheaper than the same time last month.

It's also $1.43 cheaper than the same time last year.

The unexpected surge in oil supplies, combined with falling equities markets and a rising dollar, pushed energy prices lower across the board.

Gas futures, heating oil and natural gas contracts all fell at least 3 percent.

In other Nymex trading, gasoline for August delivery fell 6.06 cents to $1.85 a gallon and heating oil lost 9.3 cents to $1.6717 a gallon.

Natural gas for August delivery dropped 15.5 cents to $3.38 per 1,000 cubic feet.

------

Associated Press writers George Jahn in Vienna and Alex Kennedy in Singapore contributed to this report.

"Short-term Treasurys fall after 5-year auction - Treasury prices mixed after auction of 5-year notes disappoints"

By SARA LEPRO, Associated Press

Last updated: 2:36 p.m., Wednesday, July 29, 2009

NEW YORK -- Short-term Treasury prices fell Wednesday, sending their yields higher, after a disappointing auction of $39 billion in five-year notes.

The auction's bid-to-cover ratio, a measure of demand, dropped to 1.92 percent from 2.58 percent at an auction of five-year notes in June.

Indirect bids, an indication of foreign buying, tumbled to 37 percent of the total bids accepted, compared with 63 percent in June.

"It's hard to describe it as anything but ugly," said Michael Pond, an interest rate strategist at Barclays Capital.

"The market is beginning to choke on the increases in supply."

The five-year note had been holding steady prior to the auction, but turned lower after the results were released.

Other Treasurys pared their gains.

The weak auction results also weighed on the stock market, which was already trading lower following a sharp drop in durable goods orders in June.

It was the second straight day of disappointing results in Treasury auctions, following a lackluster sale of two-year notes on Tuesday.

Demand at that auction was much weaker than at a similar one last month, and there appeared to be fewer foreign buyers.

The Treasury is auctioning off more than $200 billion of bills and notes this week -- a record issuance -- and investors have been concerned about flagging demand for U.S. government debt as Washington sells massive amounts of it to pay for economic and financial stimulus programs.

On Thursday, the government will issue $28 billion of seven-year notes.

In early afternoon trading, the five-year note fell 8/32 to 99 26/32, while its yield jumped to 2.67 percent from 2.60 percent late Tuesday.

The two-year note fell 3/32 to 99 20/32, and its yield rose to 1.19 percent from 1.08 percent.

Analysts said the weaker results marked a shift in investors' appetite for shorter-term Treasury debt.

Auctions of shorter-term notes have done consistently well this year, whereas auctions of longer-term debt have been more volatile.

"After the initial shock, the bigger concern should be whether there will be enough demand for 10-year and 30-year auctions in two weeks' time," Pond said.

The benchmark 10-year Treasury note rose 6/32 to 95 18/32, while its yield fell to 3.67 percent from 3.69 percent.

The 30-year bond rose 28/32 to 95 26/32 and its yield slipped to 4.51 percent from 4.55 percent.

The yield on the three-month T-bill was unchanged at 0.17 percent.

While analysts believe there is still demand for Treasurys, investors seem worried about holding on to debt for too long for fear of inflation, which eats into bonds' fixed returns over time.

Many market players believe inflation is an inevitable consequence of the government's numerous efforts to stimulate the economy by flooding the financial system with cash and keeping borrowing costs low.

If demand for government debt wanes further, the Treasury will be forced to increase the returns on bonds to lure investors, which in turn can discourage lending by raising borrowing costs for consumers and businesses.

Long-term Treasury yields determine interest rates on mortgages and other kinds of loans.

Treasurys got some support Wednesday from more purchases by the Federal Reserve, which bought up $3 billion of long-term Treasury debt.

The Fed has been buying large amounts of Treasurys this year in an effort to offset the influx of supply.

Meanwhile, stocks sold off moderately after the Commerce Department said orders to U.S. factories for big-ticket manufactured goods dropped 2.5 percent in June, more than expected.

Sounds like a plan. These days...the simpler the better.

This economy has more holes than Swiss cheese...I understand investors
(who know nothing else...God forbid they drive a nail, draft a schematic, or turn some dirt)
want to make some money...but there just isn't enough of a foundation
in employment and consumer confidence to halt this stagnation in less than years.
Add a couple of trillion-dollar federal "programs" in and it stretches to five or six.

But maybe...just maybe...the Clinton lesson will be learned by our president
and we will dial down the hemorraging of money and put it on jobs...even make-work jobs.

However, in these times...the first rule remains...protect yourself. I'm withdrawing medium sums
on a regular basis...because I expect a seizing of the drive train before inflation...BWTF do I know?

If you didn't get wiped out in this last debacle, then you probably know a bit more than those who did ...

For whatever that matters these days ...

Since it is you that now has to bail out those losers whose greed and ignorance got them there in the first place ....

And if these investors want to make some honest money ....

They should be put to work shoveling hog $*** out in Iowa ....

That will teach them some character and the value of good hard work to make your living by ....

Maybe start with Donald Trump ...

There's a dude who has been slinging a ton of $*** with his mouth over these last so many years .....

Let him now spend some time shoveling it all back up ....

And so ....

AND THEN, OF COURSE, THERE ARE GREEN SHOOTS IN THE HEALTHCARE INDUSTRY IN AMERICA ....

BUT I THINK THEY MIGHT BE IVY, WHICH HAS ITS ROOTS DEEP IN THE FACADE, TO THE POINT OF WHERE THEY ARE CRACKING IT APART ....

BUT NEVER FEAR ....

OBAMA IS HERE WITH GUMMINT MONEY TO PICK UP THE SLACK ....

And so ...

"WellPoint 2Q profit, enrollment, stock tumble - Health insurer WellPoint reports 2nd quarter profit drop, shares fall on enrollment loss"

By TOM MURPHY, Associated Press

Last updated: 4:55 p.m., Wednesday, July 29, 2009

INDIANAPOLIS -- Shares of WellPoint Inc. tumbled Wednesday after the health insurer reported a second-quarter profit drop and enrollment that slid further than analysts expected.

Total medical enrollment fell by 1.1 million people, or 3 percent, to 34.2 million compared to the same quarter last year.

The company attributed most of that loss to rising unemployment.

WellPoint, the nation's largest health insurer based on enrollment, said it expects year-end medical enrollment to fall to about 33.6 million members, a 4 percent drop.

Nonetheless, the company reaffirmed its full-year guidance.

"Given all the circumstances, most notably the unemployment rate, we really believe now is not the time to change our guidance," CEO Angela Braly said during a conference call with analysts.

The Indianapolis company, which operates Blue Cross Blue Shield plans in 14 states, earned $693.5 million, or $1.43 per share, down 7.6 percent from $750.5 million, or $1.44 per share, a year ago.

Revenue fell nearly 2 percent to $15.41 billion from $15.67 billion a year ago.

WellPoint said its adjusted earnings were $1.50 per share, excluding 7 cents per share in investment losses.

Analysts expected, on average, earnings of $1.43 per share on $15.4 billion in revenue, according to Thomson Reuters.

Analysts typically exclude one-time items from earnings estimates.

Shares fell $3.10, or 5.7 percent, to close at $51.28 Wednesday.

Fully insured enrollment fell 6 percent to 15.7 million compared to last year.

Fully insured plans are more lucrative for insurers than self-funded coverage that they administer.

WellPoint was hit particularly hard in its local group business, which consists largely of small businesses that are fully insured.

Enrollment there fell by 734,000 people.

Wells Fargo analyst Matt Perry said in a research note the enrollment declines were slightly larger than expected.

"While the quarter was strong, the underlying results look mixed," he wrote.

"The pressure in commercial fully insured margins is more severe than we expected, even after assuming some seasonality in results."

WellPoint's focus on individual and small group insurance markets leaves it exposed to a bad economy, Oppenheimer analyst Carl McDonald said in a research note.

He said employers may lay off younger, healthier workers first and retain older workers who generate more claims.

The insurer said it saw a slight increase in utilization during the quarter, with patients either using more health care or more expensive care.

WellPoint also saw a bigger jump than it expected in people continuing their coverage under the federal law known as COBRA, which helps the unemployed keep temporary health benefits.

The federal government started a subsidy earlier this year to help pay for COBRA coverage, and WellPoint said fully insured people with COBRA coverage rose from 1.6 percent to 2.2 percent largely due to that.

COBRA coverage hurts insurers because they generally spend more on claims than they receive in premiums.

Chief Financial Officer Wayne DeVeydt said the COBRA coverage increases -- which will be felt more acutely later in the year -- plus Medicare Advantage reimbursement cuts and rising unemployment will make it tough for WellPoint to generate operating earnings growth next year.

That refers to earnings growth without share repurchases or investment gains or losses.

WellPoint reaffirmed its adjusted profit outlook for 2009.

The insurer expects a full-year profit of $5.06 to $5.12 per share.

That includes net investment losses of 54 cents per share.

WellPoint competitor UnitedHealth Group Inc. said last week its medical enrollment fell 2 percent in the second-quarter, and its commercial business dropped 6 percent.

On Monday, Hartford, Conn.-based Aetna Inc. reported a 9 percent gain in medical enrollment.

But its quarterly profit sank 28 percent as it saw higher-than-expected medical costs.

We had some heavy rain up here yesterday and last night ....

A bunch of roads and bridges got washed out ....

So there are some new job opportunities up here this morning .....

Putting that Humpty-Dumpty back together again, once more ...

Old folks down that way are saying they never saw it so bad ....

And in my lifetime, it hasn't really been ....

Now we are getting torrential rains like never before ....

I think what we need are more nuke plants in America to put a bunch more water up into the upper atmosphere where it is unstable and doesn't belong ....

That will kick us up into a full employment status up here rebuilding roads and brindges every other day ....

And maybe we can unseat Louisiana as the rice-growing capital of the USA ....

Why should they have all the money down there ....

And so ...

AND WALL STREET WAS UP TODAY ....

GO FIGURE ....

And so ....

"State budget worse than thought - $2.1 billion gap this year alone"

By RICK KARLIN, Capitol bureau, Albany, New York Times Union

Last updated: 2:23 p.m., Thursday, July 30, 2009

ALBANY -- The state Budget Division projects a $2.1 billion budget deficit this year, with that amount ballooning to $18.2 by 2012 unless something is done.

"The entire shortfall of $2.1 billion is due to a reduction in the forecast for tax receipts," said Budget Director Robert Megna, who cited the ongoing recession, steep job losses and lowered income tax payments as key concerns.

Due to the widening gap, Gov. David Paterson said he'll release an Economic and Fiscal Recovery Plan in September.

That's likely to entail lawmakers returning to Albany for budget-cutting sessions similar to last year's midyear adjustments.

Additionally, Megna said the state's general fund may be in negative cash flow by November or December, prompting that fund to borrow from other state funds as a temporary measure.

"Floods destroy cars, cause heavy damage at speedway - People saved from low-lying areas as rain soaks region"

By BOB GARDINIER AND CHRISTEN GOWAN, Staff writers, Albany, New York Times Union

Last updated: 1:36 p.m., Thursday, July 30, 2009

NEW LEBANON - Race cars and dragsters at Lebanon Valley Speedway were destroyed by Wednesday's flooding and forced the cancellation of Saturday's program, a track official said.

Some of the vehicles at the track and a nearby campground remain partially submerged.

Track official Sue Bell said the track may not reopen for at least a week.

Speedway officials had not yet placed a dollar amount on the damage, but Bell said it was likely to be "thousands and thousands" of dollars.

A powerful string of thunderstorms swept through the region Wednesday.

A heavy band of storms dumped some of the largest amounts of rain on Coxsackie, Chatham and New Lebanon.

Coxsackie received more than 6 inches.

Campers were rescued early this morning when flood waters filled Kinyon's Canyon Campground off Route 66 and trapped them at their campsite, authorities said.

No one was injured when flood waters filled the campground and other low-lying areas in southern Rensselaer County and parts of Columbia and Greene counties overnight.

The East Nassau campsite where the rescue occurred is on the Kinderhook Creek, which overflowed its banks.

The creek was initially too swollen to rescue the campers, but by 5 a.m. the creek subsided enough to get them out, officials said.

A state of emergency was issued in Stephentown and the Columbia County towns of Kinderhook, New Lebanon, Stuyvesant and Chatham.

Travel in those areas is restricted to emergencies and numerous roads remained closed.

In Stephentown, a portion of busy Route 43 is closed.

Today's forecast is for clear skies.

Temperatures will be in the lower 80s.

Heavy rain will return Friday, though, with showers and thunderstorms rolling into the area in the afternoon.

Meteorologists say more than 2 1/2 inches fell in Albany, but areas to the east were hit harder.

Chatham and New Lebanon each got more than 4 inches.

The storms produced downpours and floods not seen in at least one area in more than 40 years.

High waters cut the Greene County village of Coxsackie in half Wednesday by making all but one road in and out of the community impassable.

"People who have lived here 40 years or more say they've never seen so much water in such a short period of time," Coxsackie Mayor Mark R. Evans said.

He said the village's fire companies received dozens of requests to help pump out flooded basements.

"We had rivers down sidewalks," Evans said.

"I could've ridden a canoe down the Mansion Street sidewalk yesterday."

The waters have receded but village officials are bracing for another round of rain Friday.

Even parts of the village not prone to flooding were affected.

The Hope Plaza shopping center, near the intersection of Route 9W and Route 81 was flooded, briefly trapping some customers.

Elsewhere, state Route 20 near Darrow Road in New Lebanon was closed just before 6 p.m. Wednesday due to a mudslide from a nearby hill, Columbia County sheriff's deputies said.

The road was expected to be closed for up to six hours.

Flooding also caused havoc in Rensselaer and parts of northern Saratoga County.

South Shore Road in Edinburg near the Batchellerville bridge was closed.

In Stephentown, Route 22 between routes 20 and 43 was closed until further notice.

Wednesday's heavy rains also clogged air traffic around Newark International Airport and two of the largest passenger planes in the air, a Boeing 777 and a 757, were diverted to the Albany International Airport to wait out the storm.

The planes were arriving from England and Brussels, airport spokesman Doug Myers said.

"They came in and were refueled and at about 8 p.m. they got clearance to Newark," Myers said

National Weather Service officials said the heaviest rain occurred to the south of the Capital Region where there were several reports of rain falling at the rate of 1 to 2 inches an hour.

Staff writer Bob Gardinier contributed to this report.

Its been raining here since Sunday and still going strong. Never seen it rain like this during dog days.

The rain we are getting came up from the south ...

It was torrential for a while ...

I put it into 4-wheel drive for a bit, because of all the water on the road ....

But it sounds like you might have it worse, rla ....

The problem for us up here where I am is that the country is not flat, so when you get a lot of rain like that, it does some damage flowing downhill as it has to ...

And so ...

THE OIL PATCH DOESN'T SEEM TO BE TALKING UP ANY GREEN SHOOTS ...

"Exxon, Shell extend rough streak for oil sector - Half-year profits tumble for Exxon, Shell as volatile energy prices rattle the industry"

By JOHN PORRETTO, Associated Press

Last updated: 4:15 p.m., Thursday, July 30, 2009

Oil giants Exxon Mobil and Royal Dutch Shell on Thursday added to the industry's worst midyear showing in years, stung by slumping global energy demand that threatens to further slow exploration and production.

For Exxon, the world's biggest publicly traded oil company, a 66 percent profit plunge for the second quarter marked its lowest result in nearly six years.

The Irving, Texas-based company vowed to maintain its aggressive spending plans but acknowledged the tough economic environment has made that difficult.

Its quarterly production fell too -- bad news considering it generates more than two-thirds of its earnings from oil and gas output.

"The results were very disappointing," said Brian Youngberg, an energy analyst at Edward Jones.

He noted Exxon has an extensive list of projects in various stages, "but now they need to start delivering."

Production fell 6 percent for Shell, Europe's biggest oil company, and executives said more drastic steps will be taken to adjust to the downturn.

CEO Peter Voser promised Thursday to cut jobs and reduce capital spending next year.

He said Shell would still increase production by 2 percent to 3 percent a year through 2012, reversing 7 years of declines.

"We simply don't know when the global economy will recover, and we have to plan on the basis that this downturn could last quite some time," Voser said.

When demand does rebound, however, the reduction in spending on exploration and drilling could lead to supply shortages and prices spikes like those of 2008.

Exxon Mobil said earnings for the April-June period came to $3.95 billion, or 81 cents a share, down from $11.68 billion, or $2.22 a share, a year ago, a record at the time.

Excluding one-time items, net income in the most-recent quarter amounted to $4.09 billion, or 84 cents a share.

The latest result missed the average Wall Street profit forecast by a wide margin.

Analysts polled by Thomson Reuters were looking for net income of $1.02 cents a share.

Those estimates typically exclude one-time items.

Revenue fell 46 percent to $74.5 billion.

The substantial profit falloff was no surprise given the steep drop in oil and natural gas prices from a year ago.

Already this week, ConocoPhillips said its second-quarter profit tumbled 76 percent, while BP PLC's net income fell 53 percent.

Chevron Corp., the No. 2 U.S. oil company behind Exxon, is scheduled to report earnings Friday.

Exxon posted the company's most meager quarterly showing since it earned $3.65 billion in the third quarter of 2003.

The company, which replaced Wal-Mart atop the 2009 Fortune 500 list of largest U.S. companies, has made a habit of setting quarterly and annual profit marks in the past few years.

It shares fell 71 cents to $70.72 Thursday.

They've traded in a range of $56.51 to $84.76 in the past year.

Exxon Mobil has said it expects to spend $29 billion on capital and exploration projects this year.

In its earnings release Thursday, it said the tab for the first half of 2009 amounted to $12.3 billion, "in line with our longer term plan."

"As we look out over the rest of the year, there's probably a little more downside pressure than upside pressure" on the $29 billion target, David Rosenthal, Exxon's vice president for investor relations, said on a conference call with analysts.

On a dour note, Exxon said production on an oil-equivalent basis fell 3 percent in the most-recent quarter from a year ago.

Shell said its profit slid 67 percent to $3.82 billion, but results exceeded analysts estimates.

Voser, CEO only since July 1, said a major move to streamline Shell's operations was on schedule.

He said Thursday that 150 "top managers" had been released and repeated earlier statements that there would be further "substantial" job losses among lower ranks, but didn't specify how many.

In addition, Shell said it would cut its capital expenditures in 2010 to $28 billion, from an expected $31 billion in the current year.

Its shares gained 7 cents to $52.53.

This time last year crude was in the triple digits after a historic ride to almost $150 a barrel.

Prices eventually dipped into the $30s in January but have doubled in recent months amid some signs of recovery from the worst recession in a generation.

Oil giants like Exxon Mobil are still notching billions of dollars in profits, but topping last year's mammoth numbers is almost unthinkable unless crude goes on another unprecedented ascent.

That's unlikely given the state of the global economy.

Major oil companies are finding it difficult to get spending levels right, largely because of wild fluctuations for the price of a barrel of oil.

So far this year it's been as high as $73 and as low as $33.

On Thursday, the price surged above $66 a barrel after a 6 percent drop a day earlier.

"We still have two tough quarters ahead," said Fadel Gheit, an energy analyst at Oppenheimer & Co.

"We hope things start to improve in the (first quarter) of 2010."

------

AP Business Writer Toby Sterling in Amsterdam contributed.

p.m. rains have poised us for a mid-season crop...I'm planting some okra and beans this weekend.

I'll save room for winter greens and hope for an interum blessing.

Meanwhile, the market is a bit excited about Blue Dog rationality.
That's how I see the bear rally...and expect it to calm as third quarter
pressure is dialed up by yellow (lap) dogs. We are about to see the results...
in a month or two...as the markets' calender runs.

I don't know why White House handlers aren't using the beer summit to appeal to
blue collars...it seemed an opportunity to me...until Joe Biden (white wine Joe)
sat down. That produced a 3-1 majority in the conversation for Obama-talk.

Oh well, what could have been a teach-able moment was stone-walled to media...and
was a waste. Too bad personable folk couldn't make us feel a part...instead, the
Obama-nomics, Obama-care takes center stage. If I were media advisor I'd have been
screaming..."the country is watching, don't blow the opportunity!"...oh well, that's just me.

They know what's best...until they don't...August break...constituant time.

THE LAST TWO SENTENCES OF THIS ARTICLE MAKE FOR INTERESTING READING ....

MARKETWATCH Bond Report

Jul 31, 2009, 3:41 p.m. EST

"Treasurys rise after GDP, retrace monthly yield increase"

By Deborah Levine, MarketWatch

NEW YORK (MarketWatch) -- Treasury prices gained Friday, pushing 10-year yields to the lowest in two weeks, as traders parsed the details of a government report that said the economy shrank at a 1% annualized rate in the second quarter.

Components of the report on gross domestic product indicated worrying trends in consumer spending and declining pressures on inflation, which are favorable for bond investors.

Ten-year-note yields fell for a fourth session, down by 11 basis points to 3.50%, after touching the lowest since July 14.

A basis point is 0.01%; bond yields move inversely to prices.

Yields on 2-year notes declined for the first day in five, falling 5 basis points to 1.12%.

The gains helped stem an increase in bond yields on the month, leaving them little changed and stemming a three-month run towards higher yields.

Ten-year notes did better this week, pushing yields down from 3.66% last Friday.

Two-year note yields are up from a week ago.

Still, an index of all maturities shows Treasurys lost 0.3% in July, adding to a 4.75% decline so far this year, according to Merrill Lynch.

Economists surveyed by MarketWatch had predicted GDP would contract by 1.2% during the three months ended in June.

The rate of contraction for the first quarter was revised down to a 6.4% drop compared with the Commerce Department's prior estimate of a 5.5% decline.

Also, second-quarter consumer spending dropped 1.3%, more than double what some analysts expected.

Treasurys rallied on both the benchmark revisions to previous quarters, since 2007, and a "bond-friendly" GDP price index, said Tony Crescenzi, portfolio manager at Pacific Investment Management Co., in an e-mail.

Also helping bonds, a separate report showed the employment-cost index was tame, indicating a small risk of inflation.

Bonds remained higher after a later report in which the Chicago purchasing managers index rose to 43.4% in July from 39.9% in June.

Though still indicating overall business contraction, the Chicago PMI is considered a leading indicator tipping what the national Institute for Supply Management manufacturers' survey will show when it's released on Monday.

Still, Treasurys are headed toward a fourth monthly increase in yields as signs that the recession may be coming to a close revived investors' interest in riskier assets, including equities.

The lackluster reception to some of this week's auctions of a record amount of government debt also raised eyebrows about the nation's ability to finance its increasing deficit.

Bond traders also expressed some relief after absorbing a quarter-of-a-trillion dollars in debt sales this week, though issuance this quarter is still expected to rise, pushing yields up.

Total net Treasury bill, note and bond issuance may rise to $446 billion in the third quarter of 2009, compared with the net $343 billion in the second quarter, according to a survey by the Securities Industry and Financial Markets Association released Thursday.

The median forecast is for a 10-year Treasury yield of 3.70% at the end of September and 3.90% at the end of the year.

Deborah Levine is a MarketWatch reporter, based in New York.

http://www.marketwatch.com/column/Bond%20Report

That would say to expect mortgage rates to keep rising ....

And so ...

"Signs of weakness in economy boost Treasurys - Signs of weakness in GDP report boost Treasurys after big week of auctions "

By SARA LEPRO, Associated Press

Last updated: 5:25 p.m., Friday, July 31, 2009

NEW YORK -- Treasury prices bounced higher Friday, capping a tumultuous week that saw a record amount of debt issuance, as a government report pointed to slow growth ahead for the economy.

Long-term Treasurys saw the biggest gains, extending an advance that began Thursday following a successful auction of $28 billion of seven-year notes.

The results of that auction helped ease worries about the huge influx of supply coming into the market after two auctions earlier in the week were met with only tepid demand.

On Friday, a government report revealed more weakness in the economy, sending investors in search of safe-haven assets like Treasurys.

The Commerce Department said the nation's gross domestic product, a measure of the economy's total output, fell at a slower-than-expected pace of 1 percent in the second quarter.

But the revised first-quarter GDP contraction came in much lower, at 6.4 percent from 5.5 percent, the worst quarterly reading in nearly 30 years.

The report also said consumers cut spending by 1.2 percent in the second quarter, after a slight increase in the previous three-month period.

The latest data suggesting a slow recovery helped draw money to bonds, which tend to do well in times of low inflation and muted economic growth.

In late trading, the benchmark 10-year Treasury note rose 1 1/32 to 97 1/32, pushing its yield down to 3.48 percent from 3.61 percent late Thursday.

The two-year note rose 4/32 to 99 24/32, and its yield fell to 1.12 percent from 1.18 percent.

The 30-year bond rose 1 25/32 to 99 5/32, and its yield fell to 4.30 percent from 4.41 percent.

The yield on the three-month T-bill held steady at 0.17 percent.

Its discount rate was 0.18 percent.

Investors also found some relief Friday in the fact that the Treasury's week of record auctions was over.

The government issued more than $200 billion of new debt this week.

One of investors' biggest concerns this year has been whether there will be enough demand to support the massive amounts of debt being pumped into the system to fund the government's economic stimulus programs.

If demand were to continually fall short, the government would have to bump up the returns it offers investors on bonds in order to attract enough buyers.

That could send borrowing rates higher on loans including mortgages.

With no major Treasury auctions expected now until the week of August 10, analysts believe prices should find support over the next few days, keeping yields in check.

"Regulators shut banks in Fla., NJ, Ohio, Okla. - Regulators close banks in Florida, New Jersey, Ohio, Oklahoma; 68 US bank failures this year"

Associated Press

Last updated: 6:45 p.m., Friday, July 31, 2009

WASHINGTON -- Regulators have shut down banks in Florida, New Jersey, Ohio and Oklahoma, boosting to 68 the number of federally insured banks to fail this year amid the pressures of the weak economy and mounting loan defaults.

The Federal Deposit Insurance Corp. was appointed receiver of the banks: Integrity Bank based in Jupiter, Fla., with $119 million in assets and $102 million in deposits; First BankAmericano, Elizabeth, N.J., with $166 million in assets and $157 million in deposits; Peoples Community Bank, West Chester, Ohio, $705.8 million in assets and $598.2 million in deposits; and First State Bank of Altus, Okla., $103.4 million in assets and $98.2 million in deposits.

You might notice the FDIC posted their 7/31/09 failings report after 5 p.m. EST on Friday...wonder why?

Maybe because the Obama economic salesmen were busy spinning July into a great month...
yup the market grew at a good rate (from the lowest point in 20 years) but the diversion is to
hide:



The Market Ticker
Commentary On The Capital Markets

Friday, July 31. 2009
Posted by Karl Denninger in Macro Economics at 14:36

GDP In Pictures: The Truth

The pumpers in the media will burn in Hell for dragging you (the sheeple) back into this market.

Here's the truth on GDP, in pictures:

(yoy= year over year)

I updated the previous Ticker but this is important enough to put up as a separate post. I will maintain this
quarterly as new releases come out; this is a new "staple" for The Market Ticker, where unlike the sell-side that is
always trying to get you to buy I am concerned with the truth about our economy and deal in the facts, not hype.

This is off Table 3B in the BEA's release and is actual year-over-year change in constant (chained) dollars. Feel free
to check my work - in fact, you should check my work, just like you should check everyone else's you hear, especially
if you hear a politician or media pundit opine about how "things are getting better."

Or...perhaps you'd like to see the chart from Business Week
showing how prior reports were wrong on how bad the recession
has been on GDP. All figures from from The Commerce Dept.



(numbers are years, Roman Numerals are quarters of numbered years so 09I is the 1st Qtr of 2009)

I go back and look at the REVISED GDP numbers for the first quarter, and I recall all the hype that was given to what was really the WRONG number back then, and I have to wonder if the Commerce Department isn't being told to "COOK" the books here, to make Obama's STIMULATION look more beneficial than it has been ....

And when you consider factors, the GDP is only rising, it would appear, because of the STIMULATION, which is on borrowed money, all of which has not yet been borrowed, so nobody knows what those borrowing costs are going to be ...

I think this is the biggest shell game going ....

And yet, people are going to rush to buy in, all over again ....

THE MIRAGE ....

The appearance of water in the desert leads thirsty fools to their doom ....

And so be it ....

Darwinism is constantly a force in action over which we have no control other than that which we have over our own selves ...

And in the case of economic Darwinism, the control we have over our own wallets ...

And so ...

(sounds of feet stamping on the floor)

OH!

But I so want Obama's stimulation to be successful, so stop saying all this bad stuff in here about GDP's ....

It's too scary sounding ....

I want to hear that everything is getting better ....

Why can't you post that news?

And so ...

While it is true that a recovery may look like a recession, it is also true that the first three years of a Depression may look like a recession...