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Market Commentary for October 17, 2007


The markets provided a variety of trading action today with a struggle between the Bulls and the Bears. At the closing bell, the major indices closed mostly higher with the DOW trailing the pack with a loss on the trading session. The southbound trend began early with word of another down turn in the housing markets. Trading activity was that of a whirlwind of motion, taunting the red zone, on several occasions. Investors as well as day traders played several China Stocks which are on the move once again, into much higher territory. We saw several stocks post sharp gains amidst heavy trading activity for the day. It appears that many investors are banking on China stocks and reaping in on some hefty profits.

At the closing bell, here is how the major indices ended the session: the DOW (Dow Jones Industrial Average) posted a loss of 20.40 points on the day to end the session at 13,892.54; the NYSE (New York Stock Exchange) posted a gain of 39.90 points to end the session at 10,165.30; the NASDAQ posted a gain of 28.76 points for a close at 2,792.67; the S&P 500 moved higher by 2.71 points to end at 1,541.24 and the RUSSELL 2000 moved higher by 1.54 points to close at 824.89. The FTSE All-World Index ex-US (top Large/Mid Cap aggregate from over 2,700 stocks from the FTSE Global Equity Index Series (GEIS) which covers 90% of the world’s investable market capitalization) posted a gain of 0.82 points to close at 273.33 and the FTSE RAFI 1000 posted a gain of 4.42 points to close at 6,325.78.

U.S. September Housing Starts fell by 10.2% to 1.191 Million compared to consensus of a drop by 4.2%; Building Permits fell 7.3% to 1.226 Million rate in September and August Housing Starts were revised to a drop by 3.2% from a drop by 2.6%.

U.S. Real Average Weekly Earnings rose by 0.1% in September; U.S. September CPI Energy Prices rose by 0.3%; U.S. September CPI Food Prices rose by 0.5%; U.S. September CPI Unrounded rose by 0.267%; U.S. September Core CPI Unrounded rose by 0.220%; U.S. September CPI Excluding Food & Energy rose by 0.2% compared to consensus of an increase by 0.2% and U.S. September Consumer Prices rose by 0.3% compared to consensus of an increase by 0.2%.

Department of Energy released Oil Inventories today: U.S. Crude Oil Stockpiles rose by 1.8 Million Barrels in the week compared to estimated Stockpiles of an increase by 1 Million Barrels; U.S. Gasoline Stockpiles rose by 2.8 Million Barrels in the week compared to estimate of an increase by 1 Million Barrels; U.S. Distillate Stockpiles rose by 1 Million Barrels in the week compared to estimate of a drop by 400,000 Barrels and U.S. Refineries ran at 87.3% capacity compared to expectations of an increase by 0.4% at 88.2%.

Fed Beige Book released today: Lower Dollar Making Imports More Expensive; Labor Markets Tight; 'Modest' Wage Pressures; Retail Sales Softening; Outlook Uncertain; Competition Holding Retail Prices In Check; Firms See 'Higher-Than-Usual' Economic Uncertainty; Most Fed Banks Saw Lower Home Sales, Prices; Housing To Stay 'Subdued' For 'Several Months' and Economic Growth Slowing; Housing Still Weak.

U.S. Treasury Secretary Henry Paulson calls for private market for Terrorism Insurance and won't oppose House Version of Terrorism Insurance Bill.

Prepared Statement by Treasury Under Secretary David McCormick in Advance of Meetings of the G-7 Finance Ministers and Central Bank Governors, the International Monetary Fund, and the World Bank
Washington, DC - Good afternoon. I am looking forward to a very busy set of meetings over the next several days. Secretary Paulson will host G-7 Finance Ministers and Central Bank Governors here at the Treasury on Friday. They will discuss current economic conditions and financial market developments, trade, reform of the international financial institutions, development issues, and energy and the environment among other things. Clearly recent financial market turmoil will be a focal point and a good part of the G-7 meeting will be devoted to this issue. The fundamentals of the U.S. economy remain strong even while overall growth is moderating. Consumer spending is good, unemployment remains low, export growth is strong, the current account deficit has narrowed, and our budget situation has improved considerably. We recognize the need to continue our efforts to raise national savings and reduce the deficit. I am pleased to report that for the just-complete fiscal year, our deficit fell to 1.2 percent of GDP, and we remain on track to balance the budget in 2012. The global economy remains quite strong with a robust outlook for the remainder of 2007 and 2008. Importantly, there has been some rebalancing of domestic demand growth and this is being reflected in somewhat smaller global imbalances, with the notable exception of China, which still has a rising external surplus. As in the past, Ministers will discuss the near-term outlook and prospects for growth enhancing reforms in Europe and Japan. The strong global economy and well-capitalized financial institutions provide a strong platform for addressing recent market turbulence. Financial authorities throughout the world have acted to promote systemic stability. There are signs that financial market conditions have begun to stabilize in some areas, although we recognize that it will take some time to work through the recent difficulties. The issues raised by the recent turmoil are complex and require careful analysis. We must undertake this work quickly, but we cannot rush to judgment. In this light, Secretary Paulson – working with the G7 has asked the Financial Stability Forum – under the leadership of Bank of Italy Governor Mario Draghi – to form a working group to look at the underlying causes of the turbulence and offer proposals in the areas of risk management, the accounting and valuation of financial derivatives, the role and methodologies of credit rating agencies in structured finance, and basic supervisory principles of prudential oversight of regulated financial entities. This weekend, Mario Draghi is expected to brief the G7 on the working group's work plan going forward with an expected final report to be delivered next April. Finally on this front and notwithstanding the recent turmoil, we should remember that the globalization of capital markets has brought enormous benefits to the world – broader choices in financial products, greater prosperity, and expanded opportunity. The Secretary will raise the issue of a clean technology fund, which President Bush mentioned two weeks ago as part of the Major Economies Meeting. The Fund would help finance clean energy projects in the developing world by focusing on financing the gap between traditional and more expensive clean technology. We envision that the fund will leverage bilateral donor resources, multilateral development institution resources, and private resources. We look forward to working with other countries to explore this concept and ensure the fund's success. The G-7 meeting will also include an outreach dinner on sovereign wealth funds. In particular, we seek to discuss the implications of these funds for an international financial system fundamentally based on the principle of private sector allocation of resources to their most efficient uses, and to emphasize our joint commitment to maintain openness to investment and to promote financial stability. The Secretary has invited Finance Ministry and sovereign wealth fund representatives from China, Korea, Kuwait, Norway, Russia, Saudi Arabia, Singapore and the United Arab Emirates to join us. We look forward to a constructive discussion. Over the weekend, at the International Monetary and Financial Committee and Development Committee meetings, we will discuss reform of the international financial institutions. On the IMF, we are going to emphasize the importance of the IMF implementing the new surveillance procedures on exchange rate regimes as well as the need for fundamental reform of the governance structure to reflect the rising weight of dynamic emerging markets. Our discussions on quota reforms are ongoing and we will continue to work towards a comprehensive agreement. We will also emphasize that in tackling the Fund's medium-term financing picture, serious consolidation of expenditures must be on the table in tandem with a review of the income situation. On World Bank reform, we will have an opportunity to discuss President Zoellick's recently announced priorities and strategy and focus on how the Bank can best enhance its development impact in a changing global environment.

Commodities Markets
The trend was mostly lower across the board today for the Energy Sector: Light crude moved lower today by $0.21 to close at $87.40 a barrel; Heating Oil closed lower by $0.02 at $2.34 a gallon; Natural Gas moved higher today by $0.16 to close at $8.43 per million BTU and Unleaded Gas moved lower today by $0.03 to close at $2.15 a gallon.

Metals Market ended the session mostly higher across the board today: Gold moved higher today by $0.50 to close at $762.50 an ounce; Silver moved higher by $0.09 to close at $13.75 per ounce; Platinum moved sharply higher today by $15.80 to close at $1,438.20 an ounce and Copper closed lower by $0.05 again today at $3.60 per pound.

On the Livestock and Meat Markets, the trend was lower across the board again today: Lean Hogs ended the day lower by $0.73 to close at $57.00; Pork Bellies ended the day lower by $1.75 at $83.33; Live Cattle ended the day lower by $0.13 at $97.28 and Feeder Cattle ended the day lower by $0.73 at $112.35.

Other Commodities: Corn moved lower again today by $2.50 to close at $358.00 and Soybeans moved lower again today by $3.75 to end the session at $993.00.

Bonds were higher across the board today: 2 year bond moved higher by 9/32 today to close at 100 1/32; 5 year bond moved higher by 18/32 to close at 100 5/32 today; 10 year bond moved higher by 23/32 today to close at 101 16/32 and the 30 year bond closed higher by 1 8/32 at 102 23/32 for the day.

The e-mini Dow ended the session today at 13,968 with a loss of 4 points on the trading session. The total Dow Exchange Volume for the day came in at 180,942 which are comprised of Electronic, Open Auction and Cash Exchange. Traders should review workshops available at the CBOT (Chicago Board of Trade) Educational in-person seminars schedules available on CBOT (Chicago Board of Trade) website.

The end of day results for the CBOT (Chicago Board of Trade) which is comprised of the total Exchange Volume for Futures and Options (EVFO) including Electronic, Open Auction and Cash Exchange ended the day at 3,259,252; Open Interest for Futures moved higher by 9,872 points to close at 9,494,631; the Open Interest for Options moved higher by 107,854 points to close at 8,612,475 and the Cleared Only closed higher by 426 points at 9,542 for a total Open Interest on the day of 18,116,648 for a total Change on the day with a gain of 118,152 points.

On the NYSE today, advancers came in at 1,683 decliners totaled 1,594; unchanged came in at 113; new highs came in at 137 and new lows came in at 103. Gainers and losers for the day as well as active day trading stocks on the NYSE: PetroChina Company Limited (PTR) literally soared on the trading day to tack on 33.50 points with a gain of 14.55% with a high on the session of $266.81, a low of $243.50 for a final trading price on the Big Board at $263.70; Aluminum Corporation of China Limited (ACH) bolted higher by 13.42% for a gain of 10.42 points on the day with a high of $90.95, a low of $79.30 with a closing price of $88.05; FTSE/Xinhua China (FXI) ripped higher on the session with a gain of 19.44 points for a high on the day of $218.48, a low of $207.93 with a close at the high of the day at $218.48; China Petroleum & Chemical Corporation (SNP) soared higher on the day with a whopping gain of 16.18% to tack on 24.90 points with a high on the day of $178.91, a low of $163.35 for a final trading price of $178.83; China Mobile Limited (CHL) moved nicely higher today with a gain of 8.77 points for a high on the trading session of $100.72, a low of $95.00 for a closing price of $98.77; China Telecom Corporation Limited (CHA) pierced higher on the day for a gain of 6.55 points for a high on the session of $98.66, a low of $92.94 with a closing price of $97.00; China Life Insurance Company (LFC) roared higher on the day by 11.47 points to gain 12.06% with a high on the trading session of $106.75, a low of $100.51 for a closing price of $106.56 and POSCO (PKX) was active on the trading session with a high of $169.80, a low of $161.21 with a gain of 1.30 points for a final trading price of $166.69.

On the NASDAQ today, advanced totaled 1,540; decliners totaled 1,425; unchanged came in at 148; new highs came in at 100 and new lows came in at 125. Gainers and losers for the day as well as, active day trading stocks on the NASDAQ: Fuel Tech Incorporated (FTEK) moved nicely higher on the session with a gain by 16.63% to tack on 4.78 points with a final trading price of $33.52; Lululemon Athletica Incorporated (LULU) bolted higher on the trading day to climb 13.53% for a gain of 6.40 points with a high on the day of $54.00, a low of $46.90 with a closing price of $53.70; Triad Guaranty Incorporated (TGIC) moved sharply lower on the day to post a loss of 22.17% to shed 3.58 points with a high of $16.00, a low of $12.45 for a closing price of $12.57; WebMD Health Corporation (WBMD) plummeted on the trading day with a loss of 7.89 points to shed 13.61% with a high on the day of $51.64, a low of $46.83 to close at $50.10; Google Incorporated (GOOG) soared higher on the day by 18.90 points with a high of $634.00, a low of $621.59 for a closing price of $634.90 and Baidu.com Incorporated (BIDU) posted a gain of 8.77 points with a high of $323.65, a low of $308.21 to close at $316.25.

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Millennium-Traders