Tuesday, December 13, 2005

Quick Overview

  • Blue-chips jumped and the broader market inched higher after the Fed boosted the Fed Funds rate as expected, while hinting that an end to the rate-hiking campaign could be in the works. The Fed dropped a reference to “accommodation” in a statement that followed the 13th straight increase in their target rate to 4.25%. The change suggested that central bankers see rates as high enough to avoid spurring inflation.

  • YoY, U.K.’s consumer prices were up 2.1% in November, down from a 2.3% gain in October.

  • Canada's composite index of leading indicators was up 0.3% in November.

  • The International Energy Agency predicted that world oil demand will increase by 1.9 million barrels per day through 2010.

  • The International Coffee Organization predicted that the world 2006-2007 coffee crop will total 120 million (60 kg) bags. They estimate consumption at 118 million bags.

  • J.P. Morgan said there continues to be a bull case for silver and it deserves to trade on a different outlook. All thanks to a growing number of industrial applications such as biocides, solar power, electronics and a potential ETF launch.

Monday, December 12, 2005

Quick Overview

  • The federal government's budget deficit rose sharply in November as spending raced ahead of tax receipts. The Treasury Department reported Monday that the deficit totaled $83.1 billion, the highest imbalance ever recorded in November.

  • The Federal Reserve is widely expected to raise official interest rates again at its next policy meeting on Dec. 13, which would be the 13th straight increase.

  • Mexico cut its economic growth estimate for 2005 to about 3 percent from 3.5 percent, hurt by weakness in the manufacturing sector.

  • Japan's current account surplus widened by 2.6% to 1.38 trillion ten ($11.4 Billion) in October.

  • India's industry grew in October at 8.5% the fastest pace in four months as rising incomes and consumer borrowing spurred sales.

Friday, December 09, 2005

Quick Overview

  • The University of Michigan's index of consumer sentiment increased from 81.6 to 88.7 in December, more than expected.

  • The USDA's 2005-2006 U.S. ending stocks estimate for:
    Corn was increased from 2.319 to 2.419 billion bushels.
    Soybeans were increased from 350 to 405 million bushels.
    Wheat was unchanged at 530 million bushels.
    Sugar was increased from 667,000 to 1.395 million tons.
    Cotton was increased from 6.50 to 6.90 million bales.

  • The USDA's 2005-2006 world ending stocks estimate for:
    Corn was increased from 114 to 119 million tons.
    Soybeans were increased from 47 to 48 million tons.
    Wheat was increased from 140 to 143 million tons.
    Cotton was increased from 50 to 51 million tons.

  • The USDA estimates the 2005-2006 Florida orange crop at 162 million boxes, down from last month's estimate of 190 million boxes. The projected juice yield was lowered from 1.58 to 1.55 gallons a box.
    The Brazilian government estimated its 2006-2007 coffee crop at 42.0 million bags, up from 36 million bags this year

  • Canada's labor productivity was up 0.8% in the third quarter and up 1.3% YoY.

  • Japan's GDP was up 0.2% in the latest quarter, down from an earlier estimate of 0.4%.

  • Brazil inflation eased in November, official data showed on Friday, reinforcing bets the central bank will cut interest rates next week.

  • Industrial production in France was down 2.5% in October, the biggest monthly drop in six years.

  • Mexico's central bank, with inflation at record lows, cut a key interest rate by 50 basis points.

Thursday, December 08, 2005

Jim Rogers likes commodities

JIM ROGERS: If you look at most agricultural commodities - nobody has been planning new acreage or new plantations in many years. Wheat hectares have been declining for 30 years, and that’s true of everything. As the world gets more prosperous people consume more - it’s the natural state of the world, and that’s going to continue for the next several years until somebody brings on some new supplies. You can’t just snap your finger and bring on a lot of new supply - I would point out that we haven’t had any big droughts anywhere in the world for over five years. We used to have droughts all the time - they may start coming back. I’m not investing in commodities because of weather - that would be an absurd thing to do - but it’s another reason that you’re going to see higher prices for agricultural commodities.

Quick Overview

  • U.S. jobless claims were up 6,000 last week to 327,000.

  • The U.S. Department of Energy said that underground natural gas supplies were down 59 billion cubic feet last week to 3.166 trillion cubic feet. Supplies are now down 2% from a year ago.

  • The unemployment rate in Australia dropped from 5.2% to 5.1% in November

  • Industrial production in Germany increased 1.1% in October

  • Japan's machinery orders rose 4.8% in October, providing more evidence of firms' strong desire to invest as they enjoy brisk profits and benefit from a steady recovery in the economy.

  • In the most recent quarter South Africa's gold production was down 3.4%.

  • Twelve-month inflation in Mexico fell to a historic low in November, and below the central bank's target for the first time ever.

Wednesday, December 07, 2005

Quick Overview

  • The U.S. House of Representatives on Wednesday approved legislation to make sure that millions of Americans will not be forced to pay the alternative minimum tax next year.

  • The Federal Reserve said that total consumer debt fell by $7.20 billion in October to $2.157 trillion, a record decline for the month.

  • The U.S. Department of Energy said that:
    Supplies of crude oil were up 2.7 million barrels to 320.3 million barrels.
    Supplies of unleaded gasoline were up 2.7 million barrels
    Supplies of heating oil were up 700,000 barrels.

  • Australia's GDP grew 0.2 percent in the third quarter, the slowest pace in a year.

  • Japan's Cabinet Office said that its index of leading indicators jumped from 41.7 to 80.0 in October, a sign of optimism for the economy.

  • Canada's 05/06 wheat crop totaled 26.8 million tons, up 3.5% YoY

Cheers! It's party time as Japan economy recovers
Some 63 percent of Japanese workers in a survey plan to let their hair down at traditional year-end parties with their colleagues this year, up from 49 percent last year, an indication that if not exactly rolling, the good times may be back

Tuesday, December 06, 2005

Housing Bubble Bursts in the Market for U.S. Mortgage Bonds
Bonds backed by home loans to the riskiest borrowers, the fastest growing part of the $7.6 trillion mortgage market, have lost about 2.5 percent since September on concern an 18-month rise in interest rates may force more than 150,000 consumers to default.

Quick Overview

  • The Labor Department said that business productivity was up an annual rate of 4.7% in the third quarter, the best quarterly gain in two years. The U.S. productivity growth is surging, but the wage increases that typically come with such gains have eluded American workers.

  • U.S. factory orders were up 2.2% in October. Excluding transportation, orders were up 0.6% on the month.

  • Industrial production in the U.K. was down 1% in November. YoY retail sales were p 4.6% in November.

  • The Bank of Canada increased its overnight rate from 3.00% to 3.25%.

Monday, December 05, 2005

Five Risks
Stephen Roach

The annual year-end forecasting ritual has begun. For us, it is always sparked by the extension of our forecast horizon to another year -- in this case, our first official glimpse at 2007. We also take an in-depth look at our calls for the year nearly completed (2005) as well as for the 12 months lurking just ahead (2006). It is as close to soul searching as the heartless macro prognosticator ever gets.

Quick Overview

  • The Institute for Supply Management's services index fell to 58.5 in November from 60.0 in October, below forecast of 59.0

  • President Bush called on American businesses on Monday to live up to their pension promises.

  • FedEx Corp. announced it will raise the standard rates for FedEx Ground services next year by an average of 3.9%.

  • Gasoline pump prices continued to drop in the two weeks ended Friday, falling 11 cents to an average $2.16 a gallon for all grades, analyst Trilby Lundberg reported in her latest survey of filling stations.

  • A European index of services increased from 54.9 to 55.2 in November, the best reading in over a year.

  • Gold finished near a 23-year high on Monday spurred by worries over inflation.
Is Mankind a Mistake?
When we are functioning as individuals – whether at work, in the marketplace, among friends, or driving on the freeways – our behavior toward one another tends to be peaceful and respectful. Few of us would be willing to personally inflict, even upon strangers, the brutalities that so many eagerly cheer on when performed by agents of the state with which we identify ourselves. We would quickly find ourselves without friends were we to behave toward them in ways that emulate Dick Cheney’s or Donald Rumsfeld’s recommended treatment of Iraqis. How welcome would a Madeleine Albright be in your community were she to announce that the brutal deaths of neighborhood children was a price she was willing to pay for the advancement of her career? How long would you continue working for an employer who hired Lynndie England as your immediate supervisor?

Saturday, December 03, 2005

The Greatest Debt-Beat President in History
In a letter to James Madison, Thomas Jefferson asked how, "one generation of men has a right to bind another." He concluded by saying, "No generation can contract debts greater than may be paid during the course of its own existence."

Friday, December 02, 2005

G-7 Central Bankers Pledge Not to Hurt Growth
Dec. 2 (Bloomberg) -- Central bankers from the world's richest nations sought to defuse criticism from finance ministers that they risk imperiling economic growth by raising interest rates.

Quick Overview

  • The U.S. job market rebounded last month from a hurricane-induced slowdown as nonfarm employers added 215,000 workers.

  • The unemployment rate in the Euro-zone was 8.3% in October. The unemployment rate for the EU-25 was 8.5%.

  • Current exchange rates between the dollar and yen are in line with economic fundamentals, Japanese Finance Minister Sadakazu Tanigaki said on Friday.

  • Canada's unemployment rate improved from 6.6% to 6.4% in November.

  • The USDA increased its estimate of world coffee ending stocks for 2005-2006 from 14.9 to 20.3 million bags. The production estimate was unchanged at 113.2 million bags -- world consumption was lowered from 119.4 to 116.6 million bags.

Thursday, December 01, 2005


Alarm over dramatic weakening of Gulf Stream
Researchers on a scientific expedition in the Atlantic Ocean measured the strength of the current between Africa and the east coast of America and found that the circulation has slowed by 30% since a previous expedition 12 years ago.
China worries local doctors can't spot bird flu
"I am not worried about governments at various levels covering up an epidemic," Gao told a news conference. "But I am worried about the inability of our medical and quarantine personnel at the local level to diagnose and discover epidemics in a timely fashion due to their low abilities and relatively backward equipment."
The little yellow god
The dull truth is much less bullish for gold. Investors have put money into a wide range of metals, and precious metals' prices, including gold's, have risen with the base. Meanwhile, gold remains fundamentally unattractive. It yields nothing and central banks are sitting on vault fuls of the stuff that they want eventually to sell.

Good Old Economist Mag. Bullish on War -- Bearish on Gold
Asian central banks likely to increase gold reserves
It is only a question of time for Asian central banks to follow and buy in gold: they hold 2.6 trillion US dollars in foreign exchange reserves, and able to change more of them into gold as a hedge against US dollar falls.
The US dollar will inevitably slip further. Some budget deficits of the seven major industrial countries are at a record level, and central banks are "printing banknotes" to devalue their currencies. Huge amount of budget deficits and debts in Europe, America and Japan will finally force them to increase real interest rates in an effort to drag economies back to the right track

Quick Overview

  • The U.S. Commerce Department said that personal incomes rose 0.4% in October and consumer spending went up by 0.2%.

  • YoY the core rate of personal consumption expenditures, was up just 1.8% in October, the smallest gain in six months.

  • U.S. jobless claims were down by 17,000 last week to 320,000.

  • An index of U.S. manufacturing fell from 59.1 to 58.1 in November following the two fastest-growing months of the year, the Institute for Supply Management reported Thursday

  • Construction spending rose 0.7% to an annual rate of 1.13 trillion in October for a fourth straight month, the Commerce Department reported Thursday.

  • Sugar closed at the highest level in nine years – an other production deficit is forecast for 2006 and 2007

  • Gold closed at the highest level (above $500) for 1st time since 1987

  • The DoE said that natural gas supplies were down 49 billion cubic feet to 3.225 trillion cubic feet. YoY supplies are down 2%.

  • London inventories of copper now are at 72,600 tons,

  • The Bank of Japan needs to not only make sure the economy does not fall back into deflation but should conduct monetary policy in a way that ensures a steady rise in prices, a government report said on Friday.

  • The European Central Bank increased its interest rate, from 2.00% to 2.25%, for the first time in five years.