Fear triggers gold shortage, drives US treasury yields below zero
The investor search for a safe places to store wealth as the financial crisis shakes faith in the system has caused extraordinary moves in global markets over recent days, driving the yield on 3-month US Treasuries below zero and causing a rush for physical holdings of gold

Capitalist Fools by Prof. Joseph E. Stiglitz
Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. It’s crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion.

Quick Overview

• U.S. retail sales fell 1.8% in November
  

• U.S. producer price index fell 2.2% in November and up 0.4% YoY
  

• The University of Michigan's index of consumer sentiment rose from 55.3 to 59.1
  

• Industrial output in the Euro area fell 1.2% in October and 5.3% YoY
  

• The EU will spend 200 billion Euros, 1.5% of GDP, to help the economy.
  

• Japan will spend 23 trillion yen ($255 billion) to help the economy.
  

• Bush dropped his opposition to using the $700 billion bank bailout to provide help for U.S. automakers.

Quick Overview

• (Bloomberg) -- Senate negotiations for a U.S. automaker bailout plan collapsed, in a blow to General Motors Corp. and Chrysler LLC, which may run out of cash early next year.
  “It’s over with,” Majority Leader Harry Reid said.

• U.S. jobless claims rose 58,000 last week to 573,000, the most in 26 years.
  

• The U.S. trade deficit widened in October 1.1 % to $57.2 billion from a revised $56.6 billion in September
  

• Switzerland lowered its interest rate target from 1.00% to .50%.
  

• Korea reduced its interest rate from 4.0% to a record low 3.0%
  

• Australia's unemployment rate increased from 4.3% to 4.4%
  
  

• The USDA's 2008-2009 U.S. ending stocks estimate for:
  Corn was raised from 1.124 to 1.474 million bushels, more than expected.
  Soybeans unchanged at 205 million bushels.
  Wheat was raised from 603 to 623 million bushels.
  Sugar was raised from 907,000 to 961,000 tons.
  Cotton was raised from 6.2 to 7.1 million bales.
  

• The USDA's 2008-2009 world ending stocks estimate for:
  Corn was raised from 110 to 124 million tons.
  Soybeans unchanged at 54 million tons.
  Wheat was raised from 145 to 147 million tons.
  Cotton was raised from 57 to 59 million tons.
  

• USDA lowered its estimate of the 2008-2009 Florida orange juice crop from 166 to 165 million boxes. The projected juice yield was also reduced, from 1.59 to 1.58 gallons per box.
  

• India said war is no solution to stop Pakistan based militants from launching anti-India attacks.
  

Foreclosure Storm Will Hit U.S. in 2009 as Loan Changes Fail
Rising unemployment, expiring foreclosure moratoriums and state efforts that “run out of steam” will push monthly filings toward the record of more than 303,000 set in August, Sharga said. The number of homes that revert to lenders, the last stage of foreclosure and known as “real estate owned” or REO properties, will increase to 1 million from as many as 880,000 this year, he said.

Commodity crash tests faith in supercycle
There is no such thing as consensus in the commodity world, but most experts still think that the economic arrival of two billion people in Asia is a "game-changer" that will underpin prices for years to come..

Quick Overview

• U.S. wholesale sales totaled $377.4 billion in October, down 4.1% MoM, but up 2.7% YoY. Inventories fell 1.1%.

• U.S. foreclosure activity dipped 7% MoM, but jumped 28% YoY RealtyTrac said.
  

• YoY Chinese exports fell 2.2% in November
  

• The U.S. Department of Energy said:
  Supplies of crude oil rose 400,000 barrels to 320.8 million barrels.
  Supplies of gasoline rose 3.8 million barrels to 202.7 million barrels
  Supplies of heating oil rose 1.7 million barrels.
  Refinery use increased from 84.3% to 87.4% of capacity.
  Gasoline demand fell 3.2% YoY
  Distillate demand fell 4.0% YoY.
  

• Bloomberg reported that world’s largest iron ore consumer China may ask global iron ore majors to accept an 82% price cut for iron.
  

• Bloomberg reported that BHP Billiton Ltd shipped the least amount of iron ore from Australia in 9 months amid plunging demand from China.
  

• Rio Tinto is cutting 14,000 jobs.

• Chinas President Hu reiterated the government’s commitment to use all tools at its disposal to maintain economic growth at 8% in 2009.
  

• (Reuters) - A prominent team of U.S.-based researchers predicted 14 tropical storms in the 2009 Atlantic hurricane season on Wednesday and said seven would develop into hurricanes.
  

• The dividend yield on the S&P 500 is 3.48%. The yield on a 30-year U.S. bond is 3.16% -- 1958 was the last time that happened.

• China’s November iron ore imports rose by 6% MoM.
  China's producer price decelerated to an annual rise of 2%.
  

• American Iron & Steel Industries said US weekly raw steel production fell by 44% YoY
  

Q Ratio Signals ‘Horrific’ Market Bottom, CLSA Says (Update1)
At the end of the four largest U.S. bear markets in 1921, 1932, 1949 and 1982, the Q ratio fell to 0.3 or lower, and history is likely to repeat, said Napier. From the 1982 trough, the S&P 500 grew more than 14-fold to the middle of 2000, when Napier says the last bull market ended.

Asian trade in 'Free-Fall' The Baltic Dry Index measuring freight rates for bulk goods began to collapse in June, dropping 96pc over the five months in the most dramatic fall in shipping fees ever recorded. It was a leading indicator of what we are now seeing in Asian trade

Global demand for oil to plummet
“The increasing likelihood of a prolonged global economic downturn continues to dominate market perceptions, putting downward pressure on oil prices,” it said, forecasting that demand would drop 50,000 barrels a day this year and a hefty 450,000 b/d in 2009. US oil demand will drop next year to the lowest level in 11 years.

Quick Overview

• U.S. pending home sales fell 0.7% in October.
  

• Economic sentiment in Germany rose from -53.5 to -45.2
  
  

• White House, Congress reach 15 billion auto bailout deal.
  

• Japan machinery orders fall 4.4% in October

• U.K.'s manufacturing output fell 1.4%.
  

• Canada reduce its interest rate from 2.25% to 1.50
  

• Japan's GDP fell 0.5% QoQ and 0.4% YoY.
  

• YoY South Africa's gold production fell 14.4% in October

• Merrill Lynch and Morgan Stanley, responding to evaporating profits and public ire, won't pay bonuses this year to their chief executives.
  

• (Reuters) - The United States and other rich nations must pledge by the end of next year specific targets for cutting greenhouse gas emissions by 2020 to win agreement on a U.N. climate pact, the U.N.'s top climate official said.
  

• (Bloomberg) -- Cisco Systems Inc., General Electric Co. and Emcor Group Inc. may be winners as President-elect Barack Obama seeks to revive the U.S. economy by rewiring classrooms and libraries for high-speed Internet service and repairing bridges and highways.

Quick Overview

• Stocks are up on signs that the automakers will be able to avoid bankruptcy and Obama’s proposed stimulus plan.
  

• Housing starts in Canada’s fell 19% MoM.
  

• The USDA estimates 2008-2009 world ending stocks of coffee at 39.6 million bags -- 29% of use.
• (Bloomberg) -- World coffee consumption may outstrip production by as much as 8 million bags in 2009-10 because of the smaller crop in Brazil,
  

• More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said.
  

Bulk shipping cos may benefit from early ore price resolution "Should China Iron and Steel Association successfully achieve an early reduction in contracted iron ore prices, the dry bulk market could experience a revival as iron ore shipments to more profitable steel mills resume", Nokta said in a report published on Friday

Deflation virus is moving the policy test beyond the 1930s extremes
His point was that central banks never run out of ammunition. They have an inexhaustible arsenal. The world’s fate now hangs on whether he was right (which is probable), or wrong (which is possible).

Oil Contango Pays Most in Decade as Shell Holds Crude in Ships
Stockpiling crude may provide higher returns than commodities, stocks and Treasuries as the U.S., Japan and Europe endure simultaneous recessions for the first time since World War II.

Quick Overview

• U.S. unemployment rate rose from 6.5% to 6.7%
  

• The percentage of U.S. mortgage holders who were behind in their payments rose to 6.99%.
  

• Canada’s unemployment rate rose from 6.2% to 6.3%
  

• Germany's manufacturing orders fell 6.1% in October.
  

Quick Overview

• U.S. jobless claims fell 21,000 last week to 509,000,
  
• U.S. factory orders dropped 5.1% in October.
  

• The European Central Bank reduced its interest rate from 3.25% to 2.50%,
  

• Australia reduced its interest rate from 6.5% to 5.0
  

• Britain reduced its interest rate from 3.00% to 2.00%,
  

• Sweden reduced its interest from 3.75% to 2.00%.
  

• GDP in the Euro area fell 0.2% QoQ, but up rose 0.6% YoY.
  

• (WSJ) Harvard University's endowment has investment losses of 22%, or about $8 billion, since the end of the school's fiscal year.
  

• Bernanke called on government to ramp up efforts to stem home foreclosures.
  

Recession: When the money goes, so does the toxic wife
The Toxic Wife, first identified in these pages almost two years ago, is a particular and terrifying species.

Defaults May Beat Great Depression, Junk Bonds Say
Defaults and bankruptcies are accelerating as financing options for high-yield companies dwindle amid the longest U.S. economic recession in at least 26 years. The U.S. default rate rose to 3.3 percent in October, according to Moody’s, which forecasts the rate to increase to 4.9 percent in December and 11.2 percent by November 2009.

Quick Overview

• U.S. nonfarm productivity rose 1.1% QoQ
  

• U.S. Unit labor costs rose 2.8% QoQ
  

• The ISM index of services fell from 44.4 to 37.3 -- new record low.
  

• The Mortgage Bankers Association said U.S. mortgage applications rose 51% WoW -- helped by a 30-year fixed rate at 5.47%.
  

• Australia’s GDP rose 0.1% QoQ and 1.9% YoY
  

• Retail sales in the Euro area fell 0.8% MoM and 2.1% YoY
  

• Services for the Euro zone fell from 45.8 to 42.5
  

• The U.S. Department of Energy said:
  Supplies of crude oil fell 400,000 barrels to 320.4 million barrels.
  Supplies of gasoline fell 1.6 million barrels
  Supplies of heating oil fell 2.1 million barrels.
  Refinery use fell from 86.2% to 84.3% of capacity last week.
  Gasoline demand fell 3.2%

• More than 100 countries sign cluster bomb ban. The U.S., China, India, Israel, Pakistan and Russia are among countries refusing to sign the ban.