The stock market closed much lower today; down -387.18 on the Dow Jones Industrial Average. That moved the DJIA -2.83% to 13270.68 points. The broader based, and therefore more accurate S&P 500 closed the day -44.40 (-2.96%) to 1453.09. The Main Stream Media will make that the headline story.

Yesterday, the Stock market was up almost 150 points on the DJIA. Yesterday, the 2.2% Main Stream Media billed it as a “sea-saw stock market” (Fox Radio News). Others described yesterday as another day of volatility, or they said that the stock market moved again.

When one looks at yesterday’s chart it was clear it was almost straight up. When one looks at the last week’s chart, it was clear it was almost straight up. That straight up movement was almost universally reported in neutral terms by the MSM.

On two days, the 2.2% MSM discussed the actual direction. Both those days it was dire distress and disaster on Wall Street. Today’s reports will be one of those days when the headline will be, “another losing day on Wall Street”. Two days of down trading and the world is coming to an end.

What the 2.2%s don’t tell you, Today’s big sell off, put the S&P 500 way back to where it was – one has to look way way way back to Tuesday of last week. WOW!

Tell me again that the 2.2% MSM is objective.

TODAY’s bond market activity:

The market opened with rates much lower. In this blog’s opinion, the bond market was moved by two items: The Primary mover was of course the continued concern about the sub-prim mortgage industry. It is also this blogs belief that this morning’s weekly Initial Jobless Claims moved the bond market to at least some degree.

It was predicted that 310k to 311k employees would file for first time unemployment insurance. This week, 316k workers filed, and last week’s 307k number was revised upward to 309k. As an inverse indicator, both of these higher numbers are bad for the economy. But, bad for the economy = good for rates. It is hard to imagine that these two numbers had no impact whatsoever on the thinking of bond traders and investors.

The biggest item no doubt was persistent worries about the housing market and its impact on the economy.

This morning’s Wall Street Journal online had this article, written by; By GREGORY ZUCKERMAN in New York, DAVID GAUTHIER-VILLARS in Paris and KATE KELLY in New York

“Several big market players thought to be insulated from the subprime meltdown have been hit hard in recent days, leading investors to wonder who might be next.

News of losses started early yesterday in Paris with revelations that the French bank BNP Paribas, which only last week said its exposure to the troubled subprime mortgage market was limited, was freezing three investment funds once worth a combined $2.17 billion. The funds played in the U.S. market for home loans to borrowers with shaky credit -- but only in areas considered high-quality, or investment grade. That those investments are flailing highlights how even the best-rated assets are coming under pressure.”

The Wall Street Journal continued with this summary;

• What’s Happening: Losses are emerging in more funds, leading investors to wonder who will be next.

• The Latest Victims: BNP Paribas stopped trading in three funds. Losses mounted at a Goldman fund, the second in as many days. And a group of funds known as market-neutral, which seek to do equally well in falling or rising markets, have been increasingly hit, as many seek to close out positions at the same time.

• The Fallout: The news unnerved already-jittery markets, helping to push blue-chip shares down 2.83% yesterday.

The 10-year was trading -.078% with the rate at 4.782% shortly after the opening. Around 08:10cdt {13:10gmt, 09:10edt} the 10-year Treasury was trading closer to 4.748 or -112%. Soon after, profit takers moved in and the rate stabilized. It closed right near where it opened. The 10-year Treasury closed -.078% with the rate at 4.782%, +20/32nds in price.

SHORT-TERM OUTLOOK [26 July 2007]

It looks as if a new trading range has emerged. It appears the ceiling is around 4.900%, maybe a 5.000% flat. The floor seems to be around 4.700%.

That floor COULD be tested tomorrow. Tomorrow morning could continue to be good for rates. After bond trading ended today, Countrywide Home Mortgage reported that they, and the entire mortgage industry were facing "unprecedented disruptions". These disruptions could hurt earnings and the company's financial condition, the Calabasas, Calif., lender said.

Commentary: Regarding last week’s lackluster private sector job growth.

Point #1: Much of the disappointment was in the service sector; the vast majority in the Retail and restaurant sectors.

Point #2: The ISM-Services also demonstrated slowing in retail and restaurant.

Point #3: The retail and restaurant areas are where most of the minimum wage jobs are.

Liberals in congress recently raised the minimum wage. Whenever they do that, some jobs become economically unfeasible. A grocery store may find value in hiring baggers at $5.15, but not at $7.25 an hour.

Is it any wonder this causes a slowdown in job growth in these fields?

‘Magic-wand’ economics seldom work. This feel good, vote getting legislation ultimately hurts those it was supposed to help; hamburger flippers. But, was it really those just starting out that minimum wage supporters were trying to help? More likely, it was the power hungry, old money liberals like Ted Kennedy, Jay Rockefeller, John Kerry and Al Bore-Gore that the law was to help.

Steve Boxmeyer [612] 799 – 6858

steve@LendWithIntegrity.com