Morgan Stanley warns of 'catastrophic event' as ECB fights Federal Reserve
Just as then, the dollar has plummeted far enough to cause worldwide alarm. In August 1992 it fell to 1.35 against the Deutsche Mark: this time it has fallen even further to the equivalent of 1.25. It is potentially worse for Europe this time because the yen and yuan have also fallen to near record lows. So has sterling

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• Canada’s retail sales rose 0.6% in April
  

• Mexico's central bank raised its overnight rate by 25 basis points to 7.75%.
  

• India's inflation rose to its highest level in 13 years, accelerating to 11.05% after a fuel price hike.
  
  

• YoY South Africa’s gold production fell 10.1% in April

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• U.S. leading indicators rose 0.1% in May -- better than expected.
  

• The Philadelphia Federal Reserve's regional index of manufacturing fell from -15.6 to -17.1 -- weaker than expected.
  
  

• The U.S. Labor Department said that jobless claims fell 5,000 last week to 381,000.
  
  

• China announced they are increasing their subsidized gasoline prices 16% and diesel prices 40%.
  
  

• Canada’s consumer prices rose 1.0% in May and 2.2% YoY.
  

• U.K.'s retail sales rose 3.5%.
  

• A high-ranking member of the feed industry in China warned overnight that it could face an annual corn-deficit of 400 million bushels by 2010, requiring increased imports. Rapidly increased demand for meat in the Chinese diet is fueling the rise in demand for feed grains and protein, suggesting imports of U.S. corn. Some trade sources have suggested that China may need to begin importing U.S. corn as early as this next year... (Arlan Suderman Farm Futures)
  
  

• Reuters reported that a fungal disease in Indonesia is threatening the quality of 60% of the cocoa crop.

Gold May Rise to $5,000 on Inflation, Schroder Says (Update1)
Demand for gold will also rise as central banks become net buyers for the first time in 20 years, driven by developing countries, he added. Last year, world production of gold sank to the lowest since 1937 as reserves are depleted and few new sources of gold have been found.

Mexican Peso Trims Gains as Calderon Announces Price Freezes
..Calderon said the government and industry groups had agreed to freeze the price of basic items, including tuna, coffee and beans..

The Illusion of Vast Undeveloped U.S. Oil Resources
There has been a relentless stream of discussion on talk radio and articles in the mainstream media that claim that if only all of the U.S. were opened for oil development, we would have plenty of U.S. oil. No amount of evidence would convince those promoting this idea that it is not correct, but there is ample evidence that the U.S. is in terminal decline and opening all remaining lands and waters to oil development would at best only slow the inevitable decline.

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• Canada’s index of leading indicators rose 0.2%

• Construction output in the Euro area fell 0.8% in April and down 2.4% YoY
  
  

• The U.S. DOE said:
  Supplies of crude oil fell 1.2 million barrels to 301.0 million barrels.
  Supplies of gasoline fell 1.2 million barrels
  Supplies of heating oil rose 1.4 million barrels.
  Refinery use improved from 88.6% to 89.3
  Gasoline demand was down 1.8%
  Distillate demand was down 0.4%.

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• U.S. producer prices rose 1.4% in May and 7.2% YoY.
  

• U.S. housing starts fell 3.3% from April's pace. It was the smallest number of housing starts in 17 years.
  

• U.S. industrial production fell 0.2% in May,
  

• U.K.'s consumer prices rose 3.3% YoY
  

• Japan's tertiary index rose 1.8% in April.
  

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• The N.Y. Fed’s regional index of manufacturing fell from -3.2 to -8.7 in June, weaker than expected.
  

• Consumer prices in the Euro area rose 3.7% in May
  

• The USDA expects the world's ending stocks of coffee to increase by 4.8 million bags in 2008-2009, to 17.2 million bags, or 13% of annual use.
  

• The Iowa Secretary of Agriculture said on Friday that 2% of the state's corn acres have not been planted and that another 7% were lost to flooding. This is 1.18 million acres of lost production in Iowa alone.

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• U.S. CPI rose 0.6% in May and 4.2% YoY. Excluding food and energy, prices rose 0.2%.
  

• The University of Michigan's index of consumer sentiment fell from 59.8 to 56.7 in June
  

• Japan left interest rate unchanged at 0.50%.
  

• Canada’s manufacturing sales rose 2.0%
  

• India’s wholesale prices rose 8.75% YoY.
  

• RealtyTrac said U.S. foreclosure filings rose 48% YoY, and 7% MoM.
  
  
  

Supreme Court restores habeas corpus, strikes down key part of Military Commissions Act
The Court's ruling was grounded in its recognition that the guarantee of habeas corpus was so central to the Founding that it was one of the few individual rights included in the Constitution even before the Bill of Rights was enacted. As the Court put it: "the Framers viewed freedom from unlawful restraint as a fundamental precept of liberty, and they understood the writ of habeas corpus as a vital instrument to secure that freedom." The Court noted that freedom from arbitrary or baseless imprisonment was one of the core rights established by the 13th Century Magna Carta, and it is the writ of habeas corpus which is the means for enforcing that right. Once habeas corpus is abolished -- as the Military Commissions Act sought to do -- then we return to the pre-Magna Carta days where the Government is free to imprison people with no recourse.

Quick Overview

• U.S. retail sales rose 1.0% in May. Excluding autos, sales rose 1.2%.
  

• U.S. business sales rose 1.4% in April. Inventories rose 0.5%.
  

• U.S. jobless claims rose 25,000 last week to 384,000.
  

• China's consumer prices rose 7.7% YoY.
  

• Australia's unemployment rate at 4.3% in May.
  

• Industrial production rose 0.9% in the Euro area 3.9% YoY

• Joe Leiberman says he will introduce legislation next week to ban institutional investors, like index funds, from the commodities markets.

Baltic Dry Index Has Record Decline as Port Congestion Eases
The index tracking transport costs on international trade routes dropped 963 points, or 8.7 percent, to 10,142 points, according to the Baltic Exchange in London today. Rates for so- called capesize vessels that typically haul iron ore for making steel fell 15 percent to $180,237 a day

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• Japan's GDP rose 1.0% QoQ and 1.6% YoY
  Japan’s producer prices rose 4.7% YoY.
  

• U.K.'s unemployment rate rose 0.1% MoM.
  

• Canada’s industrial capacity fell 81.8% to 79.8%
  

• India raised interest rates from 7.75% to 8.00%.
  
  

• Corn and Wheat are limit up on more storms in the Midwest.
  
  

• The U.S. DOE said
  Supplies of crude oil supplies fell 4.6 million barrels to 302.2 million barrels.
  Supplies of gasoline rose 1.0 million barrels
  Supplies of heating oil rose 600,000 barrels.
  Refinery use fell from 89.7% to 88.6% last week.
  Over the past four weeks, gasoline demand was down 1.3% YoY
  Distillate demand rose 0.7% YoY.
  
  

• BP Plc said in its annual Statistical Review of World Energy that Crude oil production fell 0.2 percent to 81.533 million barrels a day last year, from 81.659 million barrels a day in 2006.
  Global oil consumption rose 1.1 percent to 85.22 million barrels a day last year.
  China, the world's second-largest consumer, demand rose 4.1 percent to 7.855 million barrels a day.
  U.S. consumption fell 0.1 percent to 20.698 million barrels a day.
  Proved reserves were 1,237.9 billion barrels at the end of last year, compared with a revised total of 1,239.5 billion barrels for 2006.

• (Bloomberg) -- India, the world's second-biggest sugar maker after Brazil, may resume imports of the sweetener after four years as farmers plant less sugar cane because of declining prices.
  

Quick Overview

• The U.S. trade gap grew 7.8 % to $60.9 billion, its biggest one-month gain since September 2005,
  

• Japan's machinery orders rose 5.5% in April and 0.5% YoY.
  

• U.K.'s industrial production rose 0.1% in April.
  
  

• The USDA's 2008-2009 U.S. ending stocks estimate for:
  Corn was reduced from 763 to 673 million bushels.
  Soybeans were reduced from 185 to 175 billion bushels.
  Wheat was increased from 483 to 487 million bushels.
  Sugar was reduced from 1.336 to 1.273 million tons.
  Cotton was reduced from 5.6 to 5.4 million bales.
  

• The USDA's 2008-2009 world ending stocks estimate for:
  Corn was increased from 99 to 103 million tons.
  Soybeans were estimated at 50.4 million tons.
  Wheat was increased from 124 to 132 million tons.
  Cotton was reduced from 55.5 to 54.1 million bales.
  
  

• The USDA increased its estimate of 2008 U.S. beef production from 26.7 to 26.8 billion pounds, up 1.5% YoY.
  
  

• The USDA lowered its estimate of 2008 U.S. pork production from 23.5 to 23.4 billion pounds, up 6.6% YoY.
  

• The USDA left its estimate of Florida's 2007-2008 orange production at 169 million boxes, but raised juice yield from 1.65 to 1.67 gallons per box.
  
  

• The IEA said the world is consuming 86.8 million barrels of oil per day, down 80,000 barrels from last month's estimate.
  

Buffett bets S&P 500 will beat hedge funds
Buffett has long been critical of hedge funds because of the high fees they charge investors. At Berkshire Hathaway's 2006 annual meeting, he offered to bet $1 million that an index fund would beat any 10 hedge funds over a decade if all the fees were included.

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• The National Association of Realtors said that U.S. pending home sales rose 6.3% in April.
  

• Swiss unemployment rate stayed at 2.5 % last month, matching the lowest rate since July 2002.
  

• Canada’s new housing starts rose 3.5%.
  

• U.K.'s producer prices rose 1.6% in May and 8.9% YoY.
  

• Japan's index of leading indicators rose 2.0 to 92.8 in April.
  

• Treasury’s Paulson declined to rule out intervening in currency markets to stabilize the dollar.

The Rain Keeps Coming: No End in Sight This Week
So, a combination of record high crude oil prices and the current unfriendly weather for crops does not spell a return to cheap food any time soon, analysts say

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• (Dow Jones)--Trading in the global exchange-traded derivatives markets grew to a value of $692 trillion at the end of the first quarter of this year, a rise of over 28% from the last quarter of 2007, the Bank for International Settlements said Sunday.
  

• (AP)--Thousands of demonstrators fought with police after a protest over flour rations in a town on Egypt's Mediterranean coast.
  
  

• Argentina's farmers will lift their blockade on grain export sales starting Monday.
  

Soaring shipping costs fuel inflation

The cost of renting a Capesize ship, used to transport iron ore and coal, rose to $233,988 a day at the end of last week – a near 200 per cent jump since the start of the year when the cost stood at $80,000.

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• The U.S. unemployment rate rose from 5.0 to 5.5 % in May.
  
  

• Canada’s unemployment rate remained at 6.1% in May
  

• Germany’s industrial production fell 0.8% in April.
  

• World wheat production in 2008-09 will rise 8.3% YoY to 652 million metric tons, according to F.O. Licht.
  
  

• ASF delegates attending the 17th Asian Ship owners’ Forum (ASF) in Boao, China earlier this month have expressed "grave concern" that current container freight rates remained "insufficient," to cover the dramatic cost increases triggered by the high price of fuel and port congestion.
  

Quick Overview

• U.S. Jobless claims were down 18,000 last week to 357,000, lower than expected.
  

• The Bank of England kept its interest rate unchanged at 5.0%.
  

• House prices In the U.K. fell 2.4% MoM, and 3.8% YoY-- the biggest drop since April 1993 when they fell 4.9.
  
  

• The European Central Bank kept its interest rate unchanged at 4.0%. However Trichet said the central bank is considering raising rates as early as next month to tackle rising inflation
  

• Germany's factory orders were down 1.8% in April, the fifth consecutive decline.

• Corn and Beans rose as excessive rains in the U.S. Midwest flooded fields, slowing crop development, and increasing the risk of production losses.

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• U.S. worker productivity rose at an annual rate of 2.6% in the first quarter.
  

• U.S. labor costs rose at an annual rate of 2.2% in the first quarter, down from a 4.7% annual rate in Q4.
  

• The Institute of Supply Managements' index of services fell from 52.0 to 51.7 in May
  
  

• Australia's GDP rose 0.6% in Q1 and up 3.6% YoY.
  

• Retail sales volume in the Euro area fell 0.6% in April and down 2.9% YoY.
  

• Services in the U.K. fell from 50.4 to 49.8 in May.
  
  

• The U.S. Department of Energy said:
  Supplies of crude oil supplies fell 4.8 million barrels to 306.8 million barrels.
  Supplies of gasoline rose 2.9 million barrels
  Supplies of heating oil were unchanged
  Refinery use increased from 87.9% to 89.7% of capacity last week
  Gasoline demand fell 1.4%.
  Distillate demand rose 1.6%.
  
  

• YoY South Africa's gold production fell 17% in Q1. This was blamed on a lack of available electricity.
  

Monsanto Pledges Seeds to Double Crop Yields by 2030
The company is committed to doubling yields for corn, soybeans and cotton by 2030 from the levels in 2000, St. Louis- based Monsanto said today in a statement. New seeds also will reduce by one-third the amount of water and other resources needed to grow crops in the same period, Monsanto said.

Pickens Says CFTC Probe of Oil a `Waste of Time' (Update1)
``There's nothing to it to start with,'' Pickens said in interviews at an American Wind Energy Association conference in Houston. ``That's not what's happened. You have 85 million barrels a day of oil available in the global energy market and 86.4 million barrels a day of demand. So the price of oil is going to go up until you can kill demand.''

Commodity Regulator to Boost Disclosure on Agriculture Markets
Joseph Lieberman, chairman of the Senate Homeland Security and Government Affairs Committee, said May 20 he is considering legislation limiting large institutional investors in commodities markets. The legislation would aim at speculators and other investors who use commodities to hedge against swings in investment instruments such as stocks and the U.S. dollar, Lieberman, a Connecticut independent, said during a hearing.

Quick Overview

• Fed Chairman Bernanke told an international monetary conference in Spain that further rate cuts were not likely because he was ``attentive'' to the impact of the weak currency.
  

• U.S. Factory orders rose 1.1% in April -- stronger than expected.
  
  

• GDP in the Euro area rose 0.8% in the first quarter and 2.2% YoY
  

• Australia kept its interest rate unchanged at 7.25.
  

• Ford reported a 16% drop in sales of light vehicles in May, as demand for pickups and SUVs continued to sag.
  

• GM said it will close four truck plants, and may drop its Hummer brand.

Quick Overview

• The Institute of Supply Management's manufacturing index improved from 48.6 to 49.6 -- better than expected.
  

• U.S. construction spending fell 0.4% from March's pace and 3.9% YoY.
  

• Australia's retail sales fell 0.2% in April, weaker than expected.

• The USDA said:
• 95% of the corn crop was planted and 63% of it was rated good to excellent This is down from 78% last year.
  
• 69% of the soybean crop was planted, down from a five-year average of 81%.
  
• 57% of the spring wheat crop was rated good to excellent. This is down from 85% last year.
  
• 47% of the winter wheat crop was rated good to excellent -- unchanged from last week.
  

Argentine alert as inflation spectre stalks half the world
Among the CPI rates - if you believe them - are: Ukraine (30pc), Venezuela (29pc), Vietnam (25pc), Kazakhstan (19pc), Latvia (18pc), Qatar (17pc), Pakistan (17pc), Egypt (16pc), Bulgaria (15pc), Russia (14pc), the Emirates (11pc), Estonia (11pc), Turkey (9.7), Indonesia (9pc), Saudi Arabia (9.6pc), Romania (8.6pc), China (8.5pc) and India (7.6pc).

Mexicans believe drug gangs winning war with gov't According to a poll by the newspaper, 53 percent of Mexicans think that drug traffickers hold the upper hand against government forces which are trying to clamp down on cartels that ship drugs to the United States.