Bush Names Bernanke to Replace Greenspan

U.S. stocks logged their biggest one-day gain in six months as Bernanke's nomination laid to rest market uncertainty over who would by Greenspan's replacement. Bond prices ended lower on worries a Bernanke Fed could take an easier line on inflation, despite his assurances on Monday that he would steer the central bank along Greenspan's course.

As if these yahoos know why the market went up or down today. So much pretended knowingness.

Great New Picture of the Author

Larry Williams calls The Zurich Axioms "The best book I have had the joy to read on speculation."

The Zurich Axioms Article at Michael Covel Blog

Larry Williams in his book, Trade Stocks & Commodities with the Insiders--Secrets of the COT Report, mentions that Max Gunther's 1985 book The Zurich Axioms is "The best book I have had the joy to read on speculation." A fingernail version is available on this blog. Check it out.

But he paid it all back with interest on Monday!

On Monday, October 10, Phillip Bennett, CEO of Refco the futures broker, was placed on leave of absence at the Board's request. It was announced that an internal review found that he had failed to disclose owing the company around $430 million. Refco stock had closed around $28 on Friday. It closed on Monday less than $16. Refco said it must restate earnings back to 2002 and delay filing its next quarterly report, originally scheduled for next week.
Bennett was said to have repaid the $430 million with interest Monday.

On Tuesday, October 11, a story about Mr. Bennett and Refco appeared in the Financial Times and many other places. On the same day,

Federman & Sherwood Announces That a Securities Class Action Lawsuit Was Filed Against Refco, Inc.
On October 11, 2005, the class action lawsuit was filed in the United States District Court for the Southern District of New York against Refco, Inc. (NYSE : RFX) . The complaint alleges violations of federal securities laws, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, including allegations of issuing a series of material misrepresentations to the market which had the effect of artificially inflating the market price. The class period is from August 11, 2005 through October 7, 2005.

Plaintiff seeks to recover damages on behalf of the Class. If you are a member of the Class as described above, you may move the Court no later than Monday, December 12, 2005, to serve as a lead plaintiff for the Class. However, in order to do so, you must meet certain legal requirements pursuant to the Private Securities Litigation Reform Act of 1995.

If you wish to discuss this action, participate in this suit, or have any questions or concerns regarding this notice, or preservation of your rights, please contact: William B. Federman FEDERMAN & SHERWOOD 120 N. Robinson, Suite 2720 Oklahoma City, OK 73102 (405) 235-1560/FAX: (405) 239-2112 Email to: wfederman@aol.com - http://www.federmanlaw.com

SOURCE Federman & Sherwood William B. Federman of Federman & Sherwood, +1-405-235-1560, or fax, +1-405-239-2112, or wfederman@aol.com http://www.prnewswire.com

That's pretty quick, William Federman of Oklahoma City! The stock closed Tuesday at less than $14.



Warning Issued to Past and Current Shareholders of Refco, Inc. by the Law Firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP
On October 11, 2005, the law firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP ("Lerach Coughlin") (http :) (http :) filed a complaint on behalf of all those who purchased the common stock of Refco, Inc. ("Refco" or the "Company") (NYSE :) (NYSE : RFX) . The complaint alleges a series of false and misleading statements associated with the company's accounting practices and follows a lengthy investigation by Lerach Coughlin. Since Lerach Coughlin filed a complaint, The Law of Firm of Schatz & Nobel has issued a press release claiming to offer "information" about joining the suit. Be advised that this firm has not even filed a complaint. Rather, the press release appears to be an advertisement designed to solicit clients so that the firm can participate in this case.

You too are very quick on the draw, Lerach!

On Tuesday, the New York-based Refco said it had voluntarily contacted the Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, the New York Stock Exchange and other regulators, and was co-operating with their inquiries.

On Wednesday, October 12, Phillip Bennett was arrested by federal prosecutors and charged with securities fraud in U.S. District Court in Manhattan a day after Refco announced that a $430-million-US debt to the company owed by a firm controlled by the ousted chairman and chief executive was hidden through secret transfers to an unnamed customer account.

Securities Fraud Class Action Against Refco, Inc. is Filed by Scott+Scott, LLC
Scott+Scott, LLC (http :) represents investors in a securities class action filed today in the United States District Court for the Southern District of New York against Refco, Inc. ("Refco") (NYSE :) (NYSE : RFX) and certain of its officers and directors. Refco securities purchasers between August 11, 2005 and October 10, 2005, inclusive (the "Class Period") are putative class members. Refco provides execution and clearing services for exchange-traded derivatives, and brokerage services in the fixed income and foreign exchange markets in the United States, Bermuda and the United Kingdom. Refco went public via an initial public offering in August 2005.



Wechsler Harwood LLP Files Securities Class Action Suit Against Refco, Inc. -- RFX
Wechsler Harwood LLP today announced that it has filed a Federal Securities fraud class action suit on behalf of all other persons or entities who purchased or otherwise acquired Refco, Inc. ("Refco" or the "Company") (NYSE :) (NYSE :RFX) common stock pursuant or traceable to the Company's Initial Public Offering ("IPO") on August 11, 2005, and on behalf of all other persons or entities who purchased or otherwise acquired Refco common stock between August 11, 2005 and October 10, 2005, both dates inclusive (the "Class Period").

The action entitled, FrontPoint Financial Services Fund, LP. v. Refco, Inc., et al., Case No. 05-Civ-8663 (DC)(RHM), is pending in the United States District Court for the Southern District of New York seeks to pursue remedies under both the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act") and names as defendants, the Company, certain of its senior officers and directors, as well as its commercial/investment bankers/underwriters involved with the Company's IPO. A copy of the complaint can be obtained from the Court or can be viewed on Wechsler Harwood web site at: www.whesq.com.



Pomerantz Haudek Block Grossman & Gross LLP Commences Securities Class Action Against Refco, Inc. -- RFX
The Pomerantz Firm (www.pomerantzlaw.com) has filed a class action complaint in the United States District Court, Southern District of New York, against Refco, Inc. ("Refco" or the "Company") (NYSE :) has filed a class action complaint in the United States District Court, Southern District of New York, against Refco, Inc. ("Refco" or the "Company") (NYSE :) (NYSE :RFX) , two of its officers, certain underwriters and the Company's outside auditor. The class action was filed on behalf of public investors who purchased the common stock of Refco during the period of August 11, 2005 and October 7, 2005, inclusive (the "Class Period"). It includes those investors who purchased the common stock of Refco pursuant and/or traceable to the Company's initial public offering on August 11, 2005 ("IPO").



Milberg Weiss Announces the Filing of a Class Action Suit against Refco Inc. and Certain of Its Officers and Directors on Behalf of Investors
The law firm of Milberg Weiss Bershad & Schulman LLP announces that a class action lawsuit was filed today on behalf of purchasers of the securities of Refco Inc. ("Refco" or the "Company") (NYSE :) (NYSE : RFX) between August 11, 2005 and October 7, 2005, inclusive (the "Class Period"), including purchasers of the Company's shares pursuant or traceable to the Company's initial public offering (the "Offering") on August 11, 2005. The action seeks to pursue remedies under the Securities Act of 1933 ("Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act").

Shares dropped 28% on Thursday morning before trading was halted by the New York Stock Exchange.

According to a Bloomberg story today, to remain out of jail, Bennett was forced to pledge his Park Avenue apartment in Manhattan and his country horse farm in New Jersey, along with $55 million in a bond and cash.

FRB: Speech, Greenspan--Closing remarks--August 27, 2005

FRB: Speech, Greenspan--Closing remarks--August 27, 2005

FRB: Speech, Greenspan--Reflections on central banking--August 26, 2005

http://www.federalreserve.gov/BoardDocs/speeches/2005/20050826/default.htm

Thinking With Mergers and Acquisitions in terms of Foreign Exchange

FX Power Student center: "Mergers and Acquisitions

What are they?

� M&A Deals -> Average 1% Appreciation in Target's Currency

� Every $1 Billion Dollars -> 0.5% Positive Impact on Target's Currency

Mergers and acquisitions (M&A) involve the combining of two corporations or the acquisition of a part of a corporation by another corporation. Large cross border M&A activity of greater than US$500 million often has an impact on the Foreign Exchange market. A study done by the Bank for International Settlements (BIS) disclosed that large M&A deals cause the target corporation's domestic currency to appreciate 1%, on average, relative to that of the acquiring corporation. In fact, the report finds that in the period immediately after the deal is announced, there is generally a strong upward movement in the target corporation's domestic currency (relative to the acquirer's currency). Fifty days after the announcement, the target currency is then on average 1% stronger. Based upon this sample, every $1 billion deal has an approximately 0.5% positive impact on the target currency. The study also showed this impact to peak at around 5%.

How are they used in Foreign Exchange?

� All Cash Deal -> Most Significant Impact � All Stock Deal -> Minimal Impact

� Stock & Cash -> Impact Based Upon % of Cash

It is very important for traders to consider the specifics of the deal itself. For instance, deals comprised entirely of stock swaps rarely have an impact on the FX market because there is no foreign exchange transaction taking place. On the other hand, deals involving large cash transfers strongly affect the FX market. Deals involving a mixture of both elements require a more in depth assessment of the relative value of the cash portion of the transaction and whether or not it is significant enough to move the markets.

The following charts are examples of two deals done in 2003 and another in 2000. In each of the three examples, the target corporation's currency appreciated significantly against the acquirer's currency in the months following the announcement, which illustrates how M&A transactions move markets."

Earnings Estimate Revisions are the most powerful force impacting stock prices.

Go to the link and read this free report. The Zack's Rank--Harnessing the Power of Earnings Estimate Revisions.

Food for thought.

Katrina and the Price of Oil--The Dollar

Katrina may wreak considerable damage to the oil drilling rigs in the gulf. She may possibly damage the refining capacity in the area as well. This could temporarily jimmy the supply and demand for oil, causing an increase in the price of oil. This may be bearish for the dollar near term.

Or not. It's still a crapshoot.

Tom Buchanan's Trading Room

Looking into the future, which is always a crapshoot, but big and small business always have to do it, Goldman Sachs has raised its estimate of average oil prices for the next five years from $45 (its previous estimate set earlier this year) to $60 a barrel for West Texas Intermediate Crude. Compare this to Barclay's Capital which forecasts that WTI will remain above $50, Merrill Lynch forecasts $45 and Deutsche Bank estimates $38-40. Thus saith Friday's Financial Times.

It also says that while cash reserves have been accumulating in the oil industry, the rate of reinvestment has not yet picked up. The cost of development projects has doubled and is now in the tens of billions. With that much money on the line, the future forecasts have to be fairly accurate. Where is Nicky Engel when you need him?

What do it mean?

Bernanke Confirmed by Senate

Latest Business News and Financial Information | Reuters.com

FRB: Testimony, Greenspan--The economic outlook--June 9, 2005

FRB: Testimony, Greenspan--The economic outlook--June 9, 2005


We are all ears, O wise one. Your words move markets as usual. You calm our anxious hearts with the voice of reason. The dollar resumes its rise.

Gann's Advice

"You should learn to trade on knowledge and eliminate fear and hope. When you are no longer influenced by hope or fear, and are guided by knowledge you will have the nerve to trade and make profits.

". . . If you study price movements correctly, they will tell you more about what the market is going to do than any broker, newspaper, or so-called inside information. The time period is the most essential, because time tells what prices are going to do.

"LEARN To Be Independent: The greatest help that I can give you is to show you how to help yourself. If a man or woman depends upon others for advice, or for inside information and follows what others think about Commodities, he will never make a success in speculation--or anything else. You must learn to be independent. Learn to do by doing, and to know by study and application. When you are following something that you KNOW, you will have the confidence and courage to be successful.

"The most important thing outside your health for you to protect is your money. Therefore, take time to study. Prepare yourself to handle your money yourself and do not depend forever and entirely upon others.

"Knowledge is not enough. You must put into use what you learn in order to benefit. You will learn by doing. Action and execution at the proper time bring profits.

"NERVE. A man can have the finest gun in the world, but if he hasn't the nerve to pull the trigger he will never kill any game. You can have all the knowledge in the world, but if you haven't the nerve to buy and sell you cannot make profit. Knowledge gives a man nerve, makes him bold and enables him to act at the right time. When a man fails to buy or sell at the right time, the result is that he becomes afraid. Fear is a detrimental influence. When he has too much nerve and buys on hope at the top, he is guessing. When influenced by hope alone, he cannot expect profits.

"GOOD Health. . . . I have tried to trade when I was in bad health, always resulting in failure, but when I am in good physical condition, I act at the right time, making a success. If your health gives away, the most important thing is to work to get your health back in perfect shape, for HEALTH is WEALTH.


"To stand in a brokerage office or sit in a brokerage office and try to beat the market by reading the ticker and watching every quotation that comes out, is the most foolish thing a man could do, and the greatest waste of time, and the man who thinks that is the way to make money trading in commodities is making the mistake of his life. Those of us who have tried it, know. Expert tape readers are few and far between. It is the study of a lifetime, and while the tape does show the trend of the market, there are so many minor changes and quick reversals that the average man cannot tell whether the main trend has turned or whether it is only a minor change that will last a few hours, a few days, or a few weeks before the main trend is resumed again.

"You make a greater success when you sit at home or in your office, quietly follow your charts and trade on definite indications.

"I am not guessing or giving you a wild theory. I have gone through the mills. I have had every ticker in my office for years. I have thought I could not get along without them, and lost plenty of money by having them in the office and getting in wrong because the ticker showed some minor trend and threw me off the main trend which I had figured. I made a greater success when I took all the tickers out of my office and have not had a ticker in my office for the past ten years.

". . . A man cannot watch the tape and not be influenced by hope or fear.

--W.D. Gann, 1942, How To Make Profits Trading In Commodities


I think he's trying to tell me something. When I read him in 1985 I thought he had some good stuff to say, but after 20 more years, he seems wiser.

--

US Dollar--What Are The Most Market-Moving Economic Indicators?

DollarMarketMovers.pdf (application/pdf Object)


Thanks to Kathy Lien, Refco's Chief Strategist, for confirming in spades my own market observations of the past few months. Namely, that the market adjusts to economic news releases very quickly, usually within 10-20 minutes of the data release. For the small-time currency trader like myself, this suggests a strategy I call 'fishing'.

You have to be at the fishing hole ready to go, just before the news event, but not yet fishing. Then, with the release of the news, quickly throw your line in the water depending in which way the data indicates the market will go. Or which way the market is going as revealed in the first five minutes. You should have enough excitement during the succeeding 15 minutes to equal any fishing. Pull your line out. Maybe throw it in again later.

FRB: Speech, Greenspan--Derivatives markets--May 5, 2005

FRB: Speech, Greenspan--Derivatives markets--May 5, 2005

Read Chairman Greenspan's speech on derivatives here. Click on link.

FT.com / Currencies - Asian currencies withstand Chinese talk

FT.com / Currencies - Asian currencies withstand Chinese talk


Mr. Johnson puts forth the common wisdom regarding the Chinese renminbi revaluation and its effect on the currencies. See link.

"The yen drew support from continuing speculation of a renminbi revaluation by China, a move seen as heralding a period of broad Asian currency strength. . . .

"However, with the yen having already rallied from Y108.80 against the dollar in the past four weeks, Chris Towner, consultant at risk manager HIFX, argued it could be a case of 'buy the rumor, sell the fact.' The yen may have already staged its Chinese revaluation rally and could weaken when Beijing finally moves."

Time will tell, meanwhile last Friday's Commitment of Traders report from the CFTC shows the commercials are long the yen by about 31,000 contracts on the Merc. Moi? I'm sitting on the sidelines until after tomorrow's non-farm payroll report.

Philly Fed Surprise Bullish for Dollar

http://quote.bloomberg.com/apps/news?pid=10000103&sid=anEJaU2BEfvk&refer=news_index

The consensus was for a rise to 14.5. Instead, the number was 25.3, indicating stronger than expected business climate. The dollar strengthened immediately. A surprise will do that. Others attribute the dollar's sudden strengthening to a resurfacing of the rumor that Osama Bin Laden has been captured. Take your pick. In the past hour the dollar has improved against the Euro by nearly 100 pips.

FRB: Speech, Ferguson—-U.S. Current Account Deficit: Causes and Consequences—-April 20, 2005

FRB: Speech, Ferguson—-U.S. Current Account Deficit: Causes and Consequences—-April 20, 2005


This is very worthwhile reading. It includes footnotes, charts, and comes from a good source. See his bio at the link

What are the Bretton Woods Institutions?

Background to the issues

This link defines the term and gives background to the issues.

UofT G8 Information Centre: G7 Finance Ministers

UofT G8 Information Centre: G7 Finance Ministers

I find this website at University of Toronto gives you the statements from G7 meetings. You can read for yourself and see what they say without the spins from the helpful news media.