Naked Cap - - - Econ View - - - Baum - - - SMRA - - - Implode - - - Fall Street - - - Mktbeat - - - Real-Time
Forex - - - FXCM - - - Dismal - - - Calculated - - - MS - - - Suttmeier - - - Felix - - - Alea - - - NorTr - - - Safe Haven
Ninja - - - FT Blogs - - - TMTGM - - - Street Smart - - - LEH Alert - - - BCA - - - Global Insight - - - Barrons - - - InvInsight - - -
News - - - Oil - - - Copper - - - Argentina - - - Aussie - - - Laidi - - - BMO Cooper 00:02

Nikkei Projected Close In Tokyo- - - Nikkei - - - NKM8 - - - DJM8 - - - NKM8 vs DJM8
The Chicago futures market projects the Nikkei will rise +75 by Friday to 13,340 in Tokyo on Friday and end itslosing streak at 11 days, the worst run in 43 years. The NKU/DJU spread is 2,077 where it is +22 aboveits 18-day average of 2055. The DJM8 closed at 11,288, up +77 points. 01:00

-----------------------------------------------------------------------------------------------------------------

About Kidder Reports - - - What We Do

Disclaimer - - - We Do Our Best, But Don't Rely On Us!

----------------------------------------------------------------------------------------------------------------- 00:00

Inflationary Expectations Hotter by 3.3bp- - - Bloomberg Tsys - - - Cleveland Fed
- The 10Y vs Tips spread is 2.613% BREAKOUT TO NEW HIGH
- The recent range is 2.270% on Mar 17 to 2.570% TODAY; the 1 1/2-yr low is 2.180%

Across The Curve: The breakeven spread had been unable to muster a close above 255/256 basis points. I think this is significant for the Fed as they fret about whether of not higher levels of inflationary expectations have become embedded. Until now one could argue ( and I have) that the only venue in which inflation expectations have jumped is in some of the sentiment surveys. 13:08

10yr swap is +75.8, wider by +3.0bp - - - Swaps
- The May/Jul widest is 76.0bp on TODAY || The 2008 low is +56.8 on May 19
- The widest since 2001 is +91.3 on March 6
- Swap rate was +63.7 at 2007 yearend and +48.0 at 2006 yearend

The 2yr swap is +99.5, wider by +4.3bp; the recent wide is +99.5 TODAY
The swap range YTD is +110.7 on Mar 7 (19-year wide) to +56.9 12:59

FTN Bottom line:
Job losses continued to grow in June, compounding the evidence the economy is in difficult straights. For the Fed, this aggravates its current dilemma of policy implementation at a time of sluggish economic activity juxtaposed by rising commodity prices. This morning’s report makes it less likely the Fed will be able to raise interest rates to combat inflationary pressures. Unlike Trichet, who opted to raise the ECB’s benchmark lending rate by a quarter point this morning to 4.25% despite the risks that higher interest rates will deepen Europe’s downturn, Bernanke is likely to be forced into focusing on the prevention of a deep and prolonged recession. He will have to rely on a global slowdown to combat rising prices. -Lindsey Piegza

A disappointing report from the service sector this morning as business activity slowed in June. What activity there was in the month was artificially supported by inventory growth and real demand from abroad. June’s contraction, however, follows two months of expansion; the market will look for further declines in the service sector to confirm this slowing trend. 11:03

Financial Ninja - - - The Financial Ninja
Coal stocks as represented by the Market Vectors Coal ETF (KOL) got smashed yesterday. When an index drops 10% in a single day off record all time highs on record volume, you can assume a major top has been put in.

It all happened so fast I couldn’t get into the rest of my short position and will have to add on a bounce back just short of $57.00 area. A clean move above $61.00 would make me nervous and would be a clear sign of danger. While I would trade some of the position, the main profit objective is in the $44 - $46 area. 10:40

FXCM Commentary - - - Daily FX - - - Calendar
Fed Will Not Bat an Eye at NFPs, Trichet has "No Bias" -- The jobs number for the month of June was bad but not bad enough to stifle the gains in the US dollar. Non-farm payrolls fell by 62k, the sixth consecutive decline in a row. The April number also was revised down from -49k to -62k while the unemployment rate remained at 5.5%, matching the highest level since October 2004.

Posted on Wednesday: EUR/USD: How To Trade The ECB Rate Decision On Thursday -- Scenario 1: +25bps to 4.25%, Trichet Suggest It’s A One-And-Done Deal - While the EUR/USD is likely to jump on the 7:45 EDT announcement of a 25 basis point rate hike to 4.25 percent, any sort of rally will immediately reverse if Mr. Trichet suggests in his post-meeting press conference at 8:30 EDT that the bank has no intention of increasing rates further. This is the most probable scenario, and traders should watch for comments that indicate that downside risks to growth may help to offset upside inflation risks, or notes that “the current monetary policy stance will contribute to achieving our objective” of price stability. 10:35

Fall Street - - - Latest
Soros: "We are in the midst of the worst financial crisis in 30 years" Stern
“We need to start regulating capitalism better. Otherwise, it is going to destroy itself - and we are going to destroy ourselves.” 10:31

Implode - - - Headlines
Apparently the Federal Reserve has been inundated with over 8,200 consumer complaints against various banking and lending institutions for credit card abuse and predatory lending. The Fed’s inbox has been full since it invited personal comments regarding a proposed new rule to end “Unfair or Deceptive Acts or Practices.” Sarah Byrnes said, Campaign Manager of Americans for Fairness in Lending (AFFIL)" 10:25

Calculated Risk - - - Blog
The YoY change in employment is close to zero (the economy has added only 15 thousand jobs in the last year), also suggesting a recession. The private sector (excluding government jobs) declined 242 thousand over the last year. 10:11

The Mess That Greenspan Made - - - TMTGM
JPMorgan: Detroit automakers face liquidity crisis - AP
A Boom in Commodity Funds, And Each One Has Its Quirks - WSJ
Ruined by 401[k] Predators - BusinessWeek
No Loans at Mountain 1st Means Bank Credit Drying Up - Bloomberg
Will Trichet drive the world over a cliff? - Telegraph UK 10:00

WSJ Real-Time Economics - - - Real Time Economics
Economists React: ‘Consistent Picture of Weakness’ on Jobs

U.S. nonfarm payrolls shrank for a sixth consecutive month, decreasing by 62,000 jobs in June while previous months were revised lower, as businesses retrenched in the face of rising costs and a weak economy. The month’s unemployment rate held at 5.5%, after rising sharply in May. Economists and others react to the data below. 10:00

Stone & McCarthy - - - SMRA
June nonfarm payrolls fell by another 62,000. The June unemployment rate held steady at 5.5%, the same as in May. Despite the about as expected decline in June payrolls, once again, these data are very weak. May payrolls were revised to -62,000, from the first reported -49,000 drop and the change in April payrolls was revised to -67,000 from the -28,000 reported a month ago. These jobs trends are consistent with further economic weakness, and outright recession. 09:10

Economist's View - - - Many Contributors 08:00

Naked Capitalism - - - Naked Capitalism
Are Trichet's Rate Hikes 1930 All Over Again? -- Readers have taken to throwing brickbats when I post material that suggests that raising interest rates (at least in advanced economies) might not be a good move right now.

We've said before that the reason the Fed kept rates too low too long was it looked at inflation as strictly a domestic phenomenon and ignored the inflation-suppressing effects of cheap imports. That process has gone into reverse due to high oil prices and rising import prices. Remember, the reason high interest rates kill inflation is by slowing economic activity. That's already happening, and I am highly confident things will get worse all by themselves if the Fed and ECB merely stand pat. 07:30

JGB 10Y Yield Lower by 0.0bp - - - JGB 10Y
- The 10Y JGB is 1.664%; recent range is 1.884% on Jun 16 to 1.463% on April 23
- The low since July 2005 is about 1.280% in Mar; low yield since Aug 2003 is 1.170%
- The 52-week high is 2.010% on 5/15/07; highest since Aug 1999 is 2.040%

2Y is 0.849%, higher by 0.014%; the Apr/Jun range is 0.695% to 1.022bp on Jun 13
- The 2Y peak is 1.086% on June 13; the 2-1/2 year low is 0.507% on Mar 10 01:48

Bank Credit Analyst - - - Bank Credit Analyst
FXCM Commentary - - - Daily FX - - - Calendar
U.S. Manufacturing: Headwinds And Tailwinds -- The June ISM survey highlighted that U.S. manufacturing activity is holding up despite the deterioration in domestic demand. 01:48

-----------------------------------------------------------------------------------------------------------------

About Kidder Reports - - - What We Do

Disclaimer - - - We Do Our Best, But Don't Rely On Us!

----------------------------------------------------------------------------------------------------------------- 00:00

Aug Gold Priced In Euros Gold/Euro Ratio
Aug Gold is rich vs Sep euro is E599.10 || E600.40 on Jul 1 is the high since Apr
The 200-day average is E587.50 || The recent lowest is E556.70
The gold/oil ratio is 6.6 || The 18-day average is 6.6
The all-time low for the gold/oil ratio is 6.3 on Jun 12 || Gold was E568.00 14:00

Science - - - Science Daily - - - Wired - - - Scientific American - - - Edge's Annual Question
Scientific American: No-Till: How Farmers Are Saving the Soil by Parking Their Plows 13:50

Barrons - - - Barrons
Iran Conflict Could Lead to $200 Oil 11:56

Lumber: Slowly Making A Bottom - - - Sep Lumber - - - Housing Sector Index 11:38

Dissident Voice - - - Full Article 11:36

KDP High Yield Daily Index - - - KRP Index - - - Credit Default Swaps
High Yield Index is 71.97 (10.34%), the 52-week low
Index is down from 75.51 (9.33%) on Jun 6 || Index was 72.62 (10.01) Mar 18
The index was 77.60 (8.77%) on Dec 31 11:12

Felix Salmon - - - Felix Salmon
Commuting costs 10:19

FT Blogs - - - Many Contributors
Martin Wolf: the lessons from today's financial crisis

"We told you so." The Bank for International Settlements has long warned of the dangers of unrestrained credit growth and asset price inflation. As readers of BIS annual reports would expect, this one gives good answers to four big questions. 10:08

Northern Trust - - - Northern Trust
- Accumulation of Inventories Major Reason for Increase in June ISM Index
- Residential Construction Outlays Maintain Declining Trend 10:05

Street Smart - - - Sy Harding - - - S&P 21-Day Avg
As I point out every month, the govt. monthly jobs report (tomorrow morning's) has a history of coming in with a surprise in one direction or the other more often than any other set of economic numbers, creating more triple-digit one or two day moves by the Dow in one direction or the other than any other set of economic numbers. The rest of that story is that whichever way the market moves in reaction to a surprise in the numbers is usually reversed a few days later.

Given the market's very oversold short-term condition, the odds are that any market move on the jobs numbers this month is likely to be to the up side. But we shall see. 09:18

Richard Suttmeier - - - RightSide.com
The Dow has been oversold on its daily chart since June 4, but the deteriorating technicals from the monthly and weekly charts outweighed the daily chart. Now that everyone is bearish, I say that the Dow will have an oversold rally off Tuesday’s low of 11,183, which is slightly more than 3000 points below the October 2007 high. My new monthly support is 10,953 with my weekly pivot as a magnet at 11,360, and the 200-week at 11,678. 09:04

Bloomberg Columnists - - - Berry and Baum
Rules to Keep Your Skin in Wall Street Massacre: Michael Lewis 07:40

Nouriel Roubini - - - RGE Monitor
LatAm Monitor: On Populism in Argentina (and other Latin American Countries)

I came across this piece on populism so I decided to share parts of it with you. --“… [E]conomic populism is an approach to economics that emphasizes growth and income redistribution and deemphasizes the risk of inflation and deficit finance, external constraints, and the reaction of economic agents to aggressive non market policies… populist economics ultimately fail; and when they fail it is at a frightening costs to the very groups that were supposed to be favored.

Features:
1. Initial conditions. The populist policymaker—and the population at large—are deeply dissatisfied with the economy’s performance; there is a strong feeling that things can be better. Typically, the country has experienced very moderate growth, stagnation, or outright depression as a result of previous stabilization attempts. This previous stabilization experience often, though not necessarily always, has been implemented under an IMF program and has resulted in reduced growth and lower living standards… The preceding stabilization would generally have improved the budget and external balance (through the accumulation of international reserves) sufficiently to provide the room for, though perhaps not the wisdom of, a highly expansionary program.

2. No constraints. Policy makers explicitly reject the conservative paradigm and ignore the existence of any type of constraints on macroeconomic policy. Idle capacity is seen as providing the leeway for expansion… The risks of deficit finance emphasized in traditional thinking are portrayed as exaggerated or all altogether unfounded. According to populist policymakers, expansion is not inflationary (if there is no devaluation) because spare capacity and decreasing long-run costs contain cost pressures and there is always room to squeeze profit margins by price controls.

3. Policy prescriptions. In light of the initial conditions described above, the populist programs emphasize three elements: reactivation, redistribution of income, and restructuring the economy. The common thread here is “reactivation with redistribution.” The policy recommendation is to actively use macroeconomic policy to redistribute income, typically by large real-wage increases that are not to be passed on into higher prices.

The Phases of Populist Economics

I. The policymakers are fully vindicated in their diagnosis and prescription: growth of output, real wages, and employment are high, and the macroeconomic policies are nothing short of successful.

II. The economy runs into bottlenecks, partly as a result of a strong expansion in demand for domestic goods… Whereas inventory decumulation was an essential feature of the first phase, the low levels of inventories and inventory building are now a source of problems. Price realignments and devaluation, exchange controls, or protection becomes necessary. Inflation increases significantly, but wages keep up. The budget deficit worsens tremendously as a result of pervasive subsidies on wage goods…

III. Pervasive shortages, extreme acceleration of inflation,… lead to capital flight and demonetization of the economy. The budget deteriorates violently because of steep decline in tax collection and increasing subsidy costs. The government attempts to stabilize by cutting subsidies and by a real depreciation. Real wages fall massively, and policies become unstable. It becomes clear that the government is in a desperate situation.

IV. Orthodox stabilization takes over under a new government. More often than not, an IMF program will be enacted; and when everything is said and done, the real wage will have declined massively, to a level significantly lower than when the whole episode began. Moreover, that decline will be very persistent, because the politics and economics of the experience will have depressed investment and capital flight.”

I can personally not agree more with the piece. It is astonishingly actual.
[1] If somebody were to write this now, the description of the present situation in Argentina (and some other Latin American countries) can hardly be more accurate. The sad part of it is that this has been taken from a book printed in 1991 [2] and based on the Latin American experiences of the 1950s-1980s! So we should have learned from our past mistakes instead of falling once and again on the same errors.

In the current Argentine case it seems that the country is between Phase III and Phase IV, so we should really be worrying. It seems pretty clear that the Kirchners’ administration were able to read the “Features,”… but not the “Phases.”

This has been just a historical piece. But, the question is: Will history repeat itself? 01:20

-----------------------------------------------------------------------------------------------------------------

About Kidder Reports - - - What We Do

Disclaimer - - - We Do Our Best, But Don't Rely On Us!

----------------------------------------------------------------------------------------------------------------- 00:00

WSJ Marketbeat - - - News - - - Marketbeat
CIT, Today’s Winner Among Losers 13:34

Morgan Stanley Global Research - - - MS
* We forecast a 1.0% rise in May factory orders. While the durables component held steady in May, another price-related jump in the non-durables category is expected to help boost overall factory orders. Meanwhile, shipments are likely to post a modest rise, with inventories expected to rebound 0.7% following a flat result in April.

* We expect non-farm payrolls to decline 60,000 in June, which would be a sixth consecutive drop. In fact, the anticipated decline would be even larger were it not for the return of an estimated 25,000 or so auto workers who were laid off in recent months because of a strike at a major parts supplier. Significant job losses should continue to be evident in sectors such as construction and retail trade. And we anticipate a pick-up in the pace of job declines within financial services. Meanwhile, severe flooding across the Midwest is not likely to have a noticeable impact on the June job tally, but could be a more important factor in next month’s report. Finally, while we believe that the unemployment rate will trend higher over the balance of the year, this month’s report is expected to show a partial reversal of the unusually sharp rise seen in May. 12:54

Lehman Alert - - - LEH Yahoo!
20.00 +0.19 (0.95%) Jul 1 12:52pm ET
One-year low is $19.24 on Jul 1

JPMorgan Chase Alert - - - JPM Yahoo!
32.85
One-year low is $32.33 on Jul 1

Merrill Lynch Alert - - - MER Yahoo!
30.84
One-year lowis $30.56 on Jul 1 12:44

Outside The Box - - - Mauldlin's Investors Insight
The End of the Inflation Scare? Outside The Box 09:53

-----------------------------------------------------------------------------------------------------------------

About Kidder Reports - - - What We Do

Disclaimer - - - We Do Our Best, But Don't Rely On Us!

----------------------------------------------------------------------------------------------------------------- 00:00

Dismal Scientist - - - Economy.com - - - Argentina
Oil on the Boil -- Persistently high oil prices threaten inflation expectations. 13:15

Safe Haven - - - Safe Haven
The Slow Motion Recession Re-visited PF - John Mauldin 12:59

Global Research - - - Also William Engdahl
Will Canada Last? Not if we surrender our energy lifeblood to the US 09:00

The New Yorker - - - New Yorker
Seymour Hersh -- Bush's covert game in Iran? 08:22

The Prudent Bear - - - Doug Nolan
Prudent Bear (Nolan): Benchmark Fannie MBS yields fell 14 bps to 5.81%. The spread between benchmark MBS and 10-year Treasuries widened 6 bps to 185, the high since March 14th. The spread on Fannie’s 5% 2017 note widened 7 bps to 76 bps, and the spread on Freddie’s 5% 2017 note widened 6 bps to 75 bps - both wides since March 14th.

10-year yields fell 20 bps to 3.97%
German 10-year bund yields declined 11 bps to 4.52%.

“The uranium industry’s worst year is about to collide with a nuclear construction program in India and China that rivals the ones undertaken during the oil crisis of the 1970s. The result is likely to be a 58% rebound in uranium to $90 a pound from $57 now, according to Goldman Sachs JBWere Pty and Rio Tinto Group… Uranium plunged 57% in the past year…” 01:22

VIX Gains - - - CBOE Volatility Index
- Volatility is 23.93; the 4-month low is near 15.20 on May 16
- VIX is down from 5-yr high of 37.57% in Jan 2008
- On 12/14/06, VIX set 2005/06 intra-day low at 9.39

Bloomberg: The volatility index, which traders sometimes use to forecast price changes in the Standard & Poor's 500 Index, closed above 30 for the first time this year on Jan. 22 after stocks retreated to a 16-month low. The VIX reached a five-year high of 32.24 on March 17 when the S&P 500 traded at its lowest level of 2008, the day after the Federal Reserve led a bailout of Bear Stearns Cos.

The VIX is derived from the cost of options used to protect against declines in the S&P 500 and usually increases when stocks slip. Its climb above 30 in January and March marked bottoms for the benchmark index for American equities and preceded rallies of 3.3 percent and 7 percent in the following months. 01:00

From Market News International Survey on Fed expectations
Barclays was most aggressive in calling for a 2.50% year-end rate with incremental rate hikes starting in September.

JPM forecasts a steady Fed until September, when they forecast a 2.25% target, after that they see steady policy through the end of the year.

Dresdner, Mizuho and Cantor Fitzgerald are in the steady Fed camp though year-end

Merrill Lynch are the lowest on the Street calling for a 1.25% year-end target. David Rosenberg, chief economist at Merrill Lynch said it is rather amazing that in the short span of three months we could go from a debt deflation to talk of sustained inflation. The economy has not collapsed, to be sure, but we think it is still very weak. And, the financial markets still look very fragile."

Beckner of Market News International
Many observers latched on to Bernanke's inflation rhetoric and neglected his repeated comments that economic risks remain to the downside and that financial markets remain vulnerable. The result was an unbalanced view of Fed thinking and intentions. To get the kind of rate hikes that the markets priced in, the Fed would need to see stronger economic data than it's been getting, more improvement in financial conditions and/or a worsening of the inflation picture instead of the
moderation in inflation it expects. Until then, the Fed will be on hold. 15:20

Pimco: Gross and McCulley Pimco
A Kind Word for Inflation || Paul McCulley | June 2008

Bottom Line: Which means, my friends, that low, even negative real short-term interest rates are here to stay for a considerable period. Yes, I know that many believe that it is somehow sinful or immoral for the Fed to hold nominal short rates so low as to render the real return on cash to be negative. I don’t buy this proposition. Why should it be that those who only have labor to offer to the market should not be made whole for a negative terms of trade shock, while those with cash should be made whole?

In the wake of a negative terms of trade shock, all factors of production should absorb a negative hit to their real returns. If indexing to headline inflation is inappropriate for labor wages and capital’s profits, why should cash yields be indexed by the Fed?

And what if holders of cash don’t like it? Then they can step out on the risk spectrum. After all, a basic of capitalism is no risk, no reward. And temporarily higher inflation in the wake of a negative terms of trade shock is an efficient lubricant for the economy to make the necessary real adjustments. 13:04

Global Insight - - - Global Insight
French President Presents Radical Plans for Reform of Armed Forces 09:00

William Engdahl - - - Global Research
Q: What’s The Difference Between Lehman Brothers & Bear Stearns?
A: Lehman’s CEO Sits On the Board Of The NY Fed 09:15

Economic Policy Institute - - - EPI
Whether or not we are in the midst of an official recession, the nation's economy has been growing well below its potential for the past six months. Even with the stimulative boosts from Federal Reserve interest rate cuts and fiscal stimulus (rebate checks, which are yet to be felt in the job market), this weak growth period has led to a protracted loss of jobs, and as of last month, a sharp spike in joblessness. Almost 10% of the workforce is unemployed or underemployed. Long-term unemployment is high, as job losses make it particularly tough for the jobless to leave the unemployment rolls. Weekly earnings, reflecting both slower hourly wage growth and diminished weekly hours, are falling well behind inflation.

These recessionary conditions in the job market are hurting the living standards of working families and call for a renewed response from policy makers. The first order of business must be to ensure a durable safety net to catch the rising number of persons stuck in unemployment by extending unemployment insurance benefits. 01:19

Wall Street, Banks, and American Foreign Policy - - - Murray N. Rothbard
Murray Rothbard's 1984 analysis of modern American history as a great power struggle between economic elites, between the House of Morgan and the Rockefeller interests, culminates in the following conclusion: "the financial power elite can sleep well at night regardless of who wins in 1984."

By the time you get there, the conclusion seems understated indeed, for what we have here is a sweeping and compressed history of 20th century politics from a power elite point of view. It represents a small and highly specialized sample of Rothbard's vast historical knowledge coming together with a lifetime devoted to methodological individualism in the social sciences. It appeared first in 1984, in the thick of the Reagan years, in a small financial publication called World Market Perspective. It was printed for a larger audience in by the Center for Libertarian Studies in 1995, and appears in 2005 online for the first time. 14:08

Bernanke's History
Reuters on March 17: In a speech about Japan's economic dilemmas in May 2003, Fed Chairman Ben Bernanke, then a Fed governor, suggested that the government might be willing, at the request of the central bank, to exchange government debt for asset-backed commercial paper of the same maturity. "The net effect would be that the fiscal authority would assume the credit risk flowing from the nonstandard monetary policy action," he said.

Greenspan's History: Lest We Forget
Speaking in Boca Raton, Fla., in March 1999, Alan Greenspan, then the Fed chairman, told the Futures Industry Association, a Wall Street trade group, that “these instruments enhance the ability to differentiate risk and allocate it to those investors most able and willing to take it.” Although Mr. Greenspan acknowledged that the “possibility of increased systemic risk does appear to be an issue that requires fuller understanding,” he argued that new regulations “would be a major mistake.” “Regulatory risk measurement schemes,” he added, “are simpler and much less accurate than banks’ risk measurement models.” 01:32

Art As An Investment    Biddington's Appraisal & Valuations Service
Another Way to Hedge Against A Dollar Collapse

Like gold, tradable art is a store of value. Art collectors have consigned artworks valued in the hundreds of millions of dollars at New York's auction houses. Christie's and Sotheby's, the city's two most popular houses, say estimates for sales totals are the highest in almost 15 years

Wondering about the value of a painting or other artwork?
Biddington's Art Valuation Service provides an easy, inexpensive means of finding an estimate of an artwork's current market and replacement values. Our staff evaluates a work of art by sourcing past and current auction records of comparable items as well as by using our own gallery, museum & art library resources, experience and expertise. $25 Valuation Fee 05:30