Monday, February 28, 2005

Hunter Thompson: All Gone Now

At night we might buy bottles of Triple Jack at some isolated gas station and dip into an arroyo, roll a fat one and swill Jack and talk and hallucinate under the stars. An insight of the times was that if you got fifty feet off the beaten track and sat down, you didn’t exist. It still works if you need it.


02/28/05 U.S. personal income was down 2.3% in January, stronger than expected. Last month the Microsoft dividend played a roll.

U.S. new home sales were at an annual rate of 1.106 million units in January, down 9% from December's pace and down 4% YoY. The supply of homes rose to 4.7 months, the highest since June 2000.

Weather in Southern Brazil continues hot and dry. With the absence of rain, and beans in the pod-filling stage of development, soybean prices are pushing higher.

Canada's GDP was up 0.2% in December and up 2.8% in 2004.

Consumer prices in the Euro-zone were up 1.9% year over year, the lowest increase in ten months.

Jim Rogers thinks that commodities have the only “pure’ bull market

Sunday, February 27, 2005

Asian Stocks, Yen Gain on Strong Data

Japan's industrial production rose 2.1 percent in January from a month earlier, above a median market forecast of 1.7 percent, while South Korean factory output rose 3.1 percent, its fastest since a 3.3 percent rise in August 2003.

Most G-7 members favour IMF gold sales

But an outright sale from the IMF, the world’s third largest gold holder, is not the only option under consideration, according to the article.

Options could include a sale to an interested central bank or a revaluation of IMF gold reserves to current market prices, which would generate a paper profit that could be used to offset losses from debt write-off, it said.....

This Weeks Strongest World Markets

On our list, measured by 52 week ROC ( Rate of Change):

Slovakia SAX up 162%

Pakistan KSE up 71%

Czech Republic PX50 up 53%

Peru IGRA up 47%

Indonesia JKSE up 42%

Friday, February 25, 2005

Huge job cuts loom at De Beers

Five out of seven of the DBCM mines in South Africa are currently operating at a loss, the company added......In 2004, De Beers' mines in South Africa produced 13.7 million carats of diamonds, with the Kimberley mine producing 2.05 million carats and the Venetia mine 7.2 million carats

The great iron ore goldrush begins

"SOMEONE has stuffed up big-time," an MBA graduate schooled in the virtues of market research declared over her wine after hearing news that Australia's iron ore miners had secured an unprecedented 71.5 per cent hike in iron ore contract prices.

If I Don't Show Up At My Office in the Morning, You'll Know They Got Me

To any complacent readers, I issue the following red alert. If you are a revisionist, conspiracy buff, member of a religious sect, an anti-anti-gun controller, a home schooler, a pro-lifer, an anarchist, one who is out of the "mainstream,", or simply make a political fool of yourself publicly, you are on borrowed time.

US bankruptcies ‘to surge’ amid junk bond deluge

.....If a company’s debt is rated at CC or CCC, there is a 30 per cent likelihood that it will fail within a year,...........The number of companies in the junk bond danger zone is likely to continue to grow this year because investors are pouring record sums into the junk bond market while the conditions are favourable. Today a company can issue junk bonds at a cost of 303-basis points above the cost of 10-year US Treasury bonds, which is considered cheap.

Some Notable New Highs

MXY Mexico
FXI China (ETF)Exchange Traded Fund (scroll down)
HGX Philadelphia Housing Index
XOI Oil Index
SML S&P 600 Small Cap (almost)
CRB Index


U.S. GDP grew at a revised 3.8% annualized rate in the fourth quarter versus the original estimate of 3.1%. For all of 2004, GDP was up 4.4%.

And, big surprise, Government spending increased by 1.25% annual rate last quarter (originally 0.9%)

Personal consumption expenditures were revised down to a 4.2% annual rate (originally 4.6).

Business fixed investment jumped at an annual rate of 14%. Quite an increase from the original 10.3 estimate.

One of the Federal Reserve's favorite price indexes, the U.S. core rate of personal expenditures was up an annual rate of 1.6% in the fourth quarter.

TT News announces U.S. retail sales of Class 8 trucks in January kept up the same blistering pace they set in 2004, setting an apparent all-time record for the month by reaching 18,257 — a 61.9% increase over sales in the first month of last year.

U.S. existing home sales were at an annual rate of 6.80 million units in January, down from December's pace. (Lumber?)

From Motley Fools comes news that apparently 80% of all health-care events in a family's life consist of 14 very common ailments.

The USDA projected the 2005-2006 U.S. soybean harvest at 2.87 billion bushels, resulting in a drop in ending stocks, from 440 to 410 million bushels. Dry conditions are expected to continue in southern Brazil.

The 2004 supply and demand figures from the World Gold Council show 2004 world mine production down 4.4% to 2,478 tons while total demand increased 8.2% to 3,484 tons. Central bank sales were (helpfully) reduced by 19% in 2004.

GDP in the U.K. was up 0.7% in the fourth quarter and up 2.9% YoY. Less than expected.

The unemployment rate in France increased from 9.9% to 10.0% in January, the highest in five years.

An index of consumer confidence in Germany increased from 4.2 to 4.8 in February, the highest in almost a year.

"Read, every day, something no one else is reading. Think, every day, something no one else is thinking. Do, every day, something no one else would be silly enough to do. It is bad for the mind to continually be part of unanimity." Gotthold Ephraim Lessing

Thursday, February 24, 2005

Gold Rush?

Gold demand surges despite high average price in Oct-Dec
...rising 49% and 32%, respectively, in tonnage terms, says World Gold Council.

Consumer demand for gold jumped seven per cent in ’04 — the first rise in four years — with sharp price rises failing to deter buyers, the World Gold Council (WGC) said on Thursday...Turkey retained its spot as the third biggest global consumer market after India and the US, with record annual jewellery consumption and consumer demand

ATA Truck Tonnage Index Surged to Record High in January

“January proved to be a strong month for truck tonnage” said ATA Chief Economist Bob Costello. “Growing manufacturing production continues to be the driver of truck freight. And, we have seen big gains in heavy commodity movements, like steel, which is another reason why tonnage is growing at a solid pace.” he said.



The Energy Department reported a 600,000-barrel increase in crude inventories. Unleaded supplies were up 1.8 million barrels and heating oil supplies were up 300,000 barrels.

Saudi Arabia's Oil Minister was quoted as saying he sees $40 to $50 oil for the entire year.
U.S. Jobless claims reversed course and rose in the latest week, the Labor Department reported. The number of initial claims in the week ending February 19 rose 9,000 to 312,000. This is the first increase after three straight weekly declines.
U.S. durable goods orders were down 0.9% in January, weaker than expected and the first drop in three months. Excluding transportation, orders were up 0.8% on the month. Orders for core capital goods increased 2.9 percent in January after a 3.3
percent gain in December.
"Durable goods manufacturers should be dancing a jig," said Ken Mayland, president of ClearView Economics.
Shipments of core capital goods - the best monthly measure of business investment - increased 3.7 percent in January.
Inventories of durable goods increased 0.9 percent in January, while unfilled orders fell 0.2 percent.
Orders for aircraft sank 27.1 percent in January after falling 16.8 percent in December.
The USDA expects 2005 farm exports to total $59 billion and farm imports to total $58 billion.
The U.S. Census Bureau said 148.5 million bushels of soybeans were crushed in January, less than expected.
From the Journal of Commerce comes news that there is no let-up for West Coast ports. January began the year the way 2004 ended: with double-digit growth in containerized imports from Asia. >> IT's Shipping Index
The Consumers Union asked Agriculture Secretary Mike Johanns to order new tests on a cow suspected in November 2004 of having mad cow disease. The consumer group said the U.S. Department of Agriculture failed to use an internationally recognized test known as Western blot when it retested the animal and gave it a clean bill of health. "The USDA should operate out of an 'abundance of caution' in its efforts to keep the U.S. food supply safe," the group wrote Johanns.

Japan meanwhile, has yet to lift its ban on U.S. beef imports.
There is also one more cow in northern Japan that has reportedly been found with mad cow disease. If confirmed, it will be Japan's 15th case.

Also, the USDA continues to say that the border will open to young Canadian cattle on March 7th.
Japanese Deflation Deepened in January as Core Prices Dropped 0.3 Percent

Japanese consumer prices fell in January at the fastest pace since May, extending the nation's period of deflation to almost seven years and making it less likely the central bank will end its zero-rate policy.

Wednesday, February 23, 2005



The Bank of Korea softened yesterday's dollar comments by saying that even though they want to diversify into other currencies, they have no plans to "sell" U.S. dollars "at this time".
As Carl Weinber, chief economist for High Frequency Economics put it in the Wall Street Journal this morning, "People are terrified of central-bank diversification." But their really big fears are about Japan and China. Between them, they have over $1.4 trillion in reserves.
U.S. consumer prices were up 0.1% in January and up 3.0% from a year ago. The core rate was up .2% in January and up 2.3% from a year ago. The data showing tame inflation provided a modest lift for stock-index futures, after a dramatic decline yesterday.
Minutes from the Federal Reserve's latest FOMC meeting find members supporting the current policy of measured increases in the federal funds rate and expecting inflation to remain low and manageable.
A cold front that will reach the southern soybean-growing states of Rio Grande do Sul and Parana this weekend won't eliminate the current drought in the region, according to the local Somar Meteorologia weather service.
A World Health Organization official warned that health agencies need to prepare to contain the spread of avian flu, saying that the flu could soon become more deadly than SARS. The spread of bird flu has been a factor leading to higher pork demand.
Ifo's index of business confidence in Germany dropped from 97.5 to 95.5 in February.
YoY Japan's exports increased 3.2% in January while imports were up 11.6%.
Lumber futures are in new contract high. And so is Coffee.
Bush May Have Smoked Marijuana - Ohhhhhhhhh Nooooooooooo! But perhaps he was just worried about Alzheimer's

A back-to-the-future Jeffersonian liberalism ?

The new desktop-empowered generation, turned on by Republican economic choice, but turned off by the social-cultural intolerance of the GOP Taliban wing, could embrace Democrats if we return to our founder's philosophy --

Tuesday, February 22, 2005

Extraordinarily Unprecedented

Bank lending for commercial and industrial loans surged 6.6 per cent since May 5, the month before the Fed began tightening. Mergers and acquisitions in this year's first six weeks reached the fastest pace since 2000. Housing starts unexpectedly rose 4.7 per cent in January to a 21-year high after a 14 per cent surge in December. The 30-year fixed-rate mortgage two weeks ago dropped to a 10-month low of 5.48 per cent.

India is in a hurry.

How big is the market? Already, the futures market for gold and silver is about four times and 40 times, that of spot markets respectively. With imports of over 700 tonnes of gold every year and around 10,000-15,000 tonnes of gold stocked in the country, the futures market is definitely raring to grow. In other countries like America, futures volumes are as high as 72.9 and 55 (‘01) times the gold and silver spot markets respectively.


The Dollar had a bit of a rough day. The Bank of (South) Korea said yesterday that they plan to "diversify" their reserves into other currencies, and South Korea is the fourth largest holder of $ reserves. (Domino Theory anyone?) Add to that crude oil's rapid rise to above $51 a barrel - and it spooks people. (How smart are Specialists and Members? See previous)

Our trusted Shipping Index was a bit weaker today.

NYSE Advancing Declining Issues & Volume are probably overdone and due to bounce.

NYSE Advance Decline Line is below the 20 day average.

S&P and Dow Point & Figure charts show O's but no sell yet.

U.S. Consumer Confidence came in at 104 , down from 105.1, but still better than expected.
YoY, consumer prices in Canada were up 2.0% in January, down from 2.1% in December.
Canada's index of composite leading indicators was up 0.2% in January to 201.6.
Consumer spending in France was up 1.5% in January and up 3.8% YoY.
In regards to soybeans there are continued concerns about hot and dry conditions in Southern Brazil. AgRural, estimated Brazil's soybean crop at 60 million tons, less than the USDA's estimate of 63 million tons (2.3 billion bushels). There is a chance that Southern Brazil may get some scattered showers this week, but high temperatures are expected in the upper-90's and low-100's.
The USDA said that there were 63.5 million pounds of frozen bellies in storage on January 31st, up 0.7% YoY. Frozen pork inventories totaled 499 million pounds, down 1% YoY.
The USDA said that as of January 31st, there were 1.49 billion pounds of frozen orange juice in U.S. cold storage, down 8% YoY.

People had expected the weather to be better in Brazil

Hotter weather in Brazil's major soybean-growing areas of Rio Grande do Sul, Parana and southern Mato Grosso are damaging plants just as beans are forming in pods, the Meteorlogix weather service said yesterday. In Argentina, more rain is needed to prevent crop losses, it said.

Korea "rebalancing" out of Dollars

The dollar fell against the euro by more than a cent overnight after it became known that the Korean central bank is rebalancing its reserves away from the dollar and in favor of a basket of other currencies. Korea is the 5th largest US creditor, owning $69 billion of our US Treasury debt. That they've acknowledged selling dollars leads to a suspicion that others also have - and more will follow.

Monday, February 21, 2005

Something Positive

Commercial and Industrial loans of weekly reporting large commercial banks have clearly picked up. Finally, it took a while.

Where’s the strongest stock market to be found?

And the answer is ............ Slovakia up 143% year over year.(At least on our list)

Specialist Short Sales

We find the recent action by NYSE specialists

And NYSE Members interesting.

Friday, February 18, 2005


The University of Michigan's index of consumer sentiment dropped from 95.5 to 94.2 in February, weaker than expected.
The core U.S. PPI was up 0.8% in January, much more than expected and
the largest monthly gain in over six years. The jump in prices was blamed on higher prices for cars and cigarettes. Overall, producer prices were up 0.3% for the month. On the news US Treasury Bonds closed down 27/32. Perhaps afraid of an annualized inflation rate of 9.6 percent?----------
The U.K. posted a budget surplus of 6.6 billion pounds in January, more than expected and the most in three years. Corporate tax receipts in January were 31% higher than a year ago.
Wholesale sales in Canada were up 1.1% in December to C$38.7 billion, the third monthly gain.
France's GDP was up .8% in the fourth quarter and up 2.3% for all of 2004, the best performance in four years.
Consumer prices in Germany were down .4% in January and up 1.6% YoY. The 12-month rate of inflation was therefore substantially slower than the 2.1 percent recorded in December
The Brazilian firm, Safras e Mercado, estimated the current soybean crop at 61.2 million tons, less than the USDA's estimate of 63 million tons (1.7 billion bushels).
The USDA said that there were 11.334 million head of cattle on feed as of February 1st, less than expected. January placements were up 7.5% and marketing’s were up slightly from a year ago. Cattle are expected to trade higher on Tuesday.
World oil prices rose on fears of an Opec production cut amid expectations of colder weather in the United States' northeast, analysts said.
Wal-Mart, the world's largest retailer, earned $10.27 billion in 2004, up 13% from the previous year. Revenues were up 11% to $288.2 billion.
Emerging markets most popular for foreign property. Nick Clark, managing director of the Homebuyer Show, commented that opportunities to purchase property abroad are now within the reach of more people than ever.” Buying a property overseas has been a distant dream for many people for a long time," he said.
The United States has been Japan's largest trade partner after the WWII. Therefore, it can be said that the development of Japan's economy depends on the US economy to a certain extent. However, the latest statistics of the Japanese government shows that Japan's trade with China surpassed that between Japan and the US in 2004 and China replaced the US as Japan's largest trade partner. Such a news intrigued extreme echoes in various circles of Japan.
Copper prices at 16-year high amid strong Chinese demand. Copper has risen sharply over the past year as the strongest growth of the global economy for 30 years boosted the prices of commodities across the board..... Global inventory levels of the metal are at record lows but mining companies are beginning to increase the amount of copper they produce.

Thursday, February 17, 2005


The Canadian Press reported that "China has surpassed the United States in consumption of every basic food, energy and industrial commodity except oil."