China to drive world economy as US stumbles: economists

Quick Overview

• A congressional report released on Thursday said the U.S. budget shortfall will hit $337 billion this year, a figure that is up $23 billion from an August estimate and excludes more funds needed for the Iraq and Afghanistan wars.
  
  

• U.S. Jobless claims were up 11,000 last week to 283,000.
  

• U.S. Durable goods orders increased 1.3% in December, more than expected. Excluding transport, orders were up 0.9%. For all of 2005, orders totaled a record high $2.51 trillion.
  

• Brazil's unemployment rate fell in December to its lowest level in nearly four years, slipping to 8.3 percent as fewer people actively looked for work during an economically sluggish holiday season, the government said Thursday.
  
  

• YoY Japan's December exports were up 17% and imports were up 27%, because of higher energy prices.
  

• USDA said tariffs charged on the Gulf to Japan trade route have averaged $36.33 a metric ton during the past three months, down from $50.08 a ton one year ago.
  
  

• Silver prices rose to hit a new 19-year high on fund-buying Thursday. Some of the move may be a "catch-up" to gains that previously had been occurring in gold, analysts said, and some buying is market speculation that Barclays Global Investors may win government approval to launch a silver exchange-traded fund.
  

• The DoE said that underground supplies of natural gas were down 81 billion cubic feet to 2.494 trillion cubic feet.
  

India sees record 75.5 million tonnes wheat output
NEW DELHI: India is expected to produce a record wheat output of 75.5 million tonnes this year, well above about 72 million tonnes in 2005, the Food Ministry said on Wednesday, but traders cautioned it was too early to make a call.

Tech leaders press Bush on U.S. competitivenessAfter decades of uncontested global dominance, the United States is now at risk of falling behind emerging powerhouse nations such as China and India, according to C&I believers. If we don't move fast to improve our education system, boost research funding and fix overly restrictive immigration laws, the U.S. will soon lose its place as the world's biggest and most inventive economy.

Environmental Report Rates New Zealand No. 1
The United States ranked below nearly every major country in Western Europe, although it outperformed Russia and several Eastern European nations, including Hungary and Poland

Quick Overview

• U.S. Existing home sales were at an annual rate of 6.6 million units in December, down 5.7% from November's pace. There are 2.8 million homes for sale in the U.S. -- a five month supply.
  

• China's GDP was up 9.9% in 2005 to $2.3 trillion. That puts China in the number five position,
  just behind Britain, Germany, Japan and the United States. .

• YoY Mexico's economy expanded a slower-than-expected 2.7 percent in November.
  
  

• GDP in the U.K. was up 06% in the fourth quarter and up 1.8% for all of 2005.
  

• YoY Consumer prices in Australia were up 2.8%
  

• The Ifo index of business confidence in Germany increased from 99.7 to 102.0 in January
  

• South Korea's GDP was up 4.0% in 2005.
  

• Ford Motor Co. said Wednesday it is developing the Ford Escape Hybrid E85, a research vehicle marrying hybrid electric power and ethanol capability
  
  
  

• The Chinese National Bureau of Statistics said that:
  2005 Cotton Output was 5.7 Mln MT, down 9.8% YoY.
  Total grain output in 2005 rose 3.1% to 484 million tons.
  Meat production for the year rose 6.3%.
  2005’s Oilseed and sugar output were unchanged from 2004.
  
  Ag Minister Du Qinlin said that, although grain output has risen in the past two years, production has still failed to meet demand. He says it will be increasingly difficult to boost output due to China's growing population, water shortages, and a decrease in the size of farm lands.
  Du said that China will likely face a shortage of grains next year, as demand is expected to exceed output by 15 million tons, demand for grains are expected to reach 495 million tons in 2006.
  China also said that they imported 1.39 million tons of sugar, up 14% from a year ago.
  
  

• There is speculation that a decision may be nearing on a Barclays silver ETF.
  
  

• Regulators in India will allow mutual funds to launch gold ETF’s.
  
  
  

• The DoE said that:
  Supplies of crude oil were down 2.3 million barrels to 319.1 million barrels.
  Supplies of unleaded gasoline were up 3.2 million barrels
  Supplies of heating oil supplies were up 1.6 million barrels.
  
  
  
  
  

White House Was Told Hurricane Posed Danger The White House was told in the hours before Hurricane Katrina hit New Orleans that the city would probably soon be inundated with floodwater, forcing the long-term relocation of hundreds of thousands of people.....

...."I don't think anyone anticipated the breach of the levees," Mr. Bush said in a television interview on Sept. 1. "Now we're having to deal with it, and will."

77% of Google users don't know it records personal data
Google maintains a lifetime cookie that expires in 2038, and records the user's IP address. But more recently it has begun to integrate services which record the user's personal search history, email, shopping habits, and social contacts. After first promising not to tie its email service to its search service, Google went ahead and opted its users in anyway. It's all part of CEO Eric Schmidt's promise to create a "Google that knows more about you."

BoE’s Lomax warns of impact of global imbalances
Of particular concern is the possibility that the “global savings glut” described by incoming Federal Reserve chairman Ben Bernanke, may stop being used to purchase US assets. There is evidence that foreign investors, including some Asian central banks have already started cutting pack on such purchases. Net capital flows into the US in fell from $104bn in October to $89.1bn in November, though this was still sufficient to cover that month’s current account deficit of $64.2bn.

Google Agrees to Censor Results in China
Online search engine leader Google Inc. has agreed to censor its results in China, adhering to the country's free-speech restrictions in return for better access in the Internet's fastest growing market. ... Google's decision rankled Reporters Without Borders, a media watchdog group that has sharply criticized Internet companies including Yahoo and Microsoft Corp.'s MSN.com for submitting to China's censorship regime

Quick Overview

• The confidence of U.S. consumers rose in the latest week as concerns about weather and energy prices eased, ABC News and the Washington Post said on Tuesday.
  

• The Bank of Canada increased the overnight rate from 3.25% to 3.50%,
  

• The Russian government said that its GDP increased 6% in 2005.
  

• The Reserve Bank of India increased its interest rate from 5.25% to 5.50%, the highest in three years.
  

U.S. losing its luster as a talent magnet
This talent outflow poses more long-term dangers to our economy than the migration of low-skill-level jobs to cheaper foreign labor markets

Quick Overview

• The massive and growing U.S. current account deficit poses a threat to the world economy and an eventual adjustment will not necessarily be gradual, New York Federal Reserve Bank President Timothy Geithner said on Monday.
  
  
  

• The Conference Board's index of U.S. leading indicators was up 0.1%, less than expected.
  
  

• Canada's retail sales were up 1.1%.
  
  

• The USDA said there were 428 million pounds of frozen pork in storage, down 11% YoY. Frozen bellies totaled 47.9 million pounds, down 15% YoY.
  
  

• The USDA said there were 1.045 billion pounds of frozen orange juice in storage on December 31st, down 29% YoY.
  

I, Greenspan
Since I joined the Fed, outstanding home-mortgage debt has jumped from $1.8 trillion to $8.2 trillion. Total consumer debt went from $2.7 trillion to $11 trillion. Household debt has quadrupled.

And government debt, too, exploded. The feds owed less than $2 trillion in the second Reagan administration, a figure that had been almost constant for the previous 40 years. But under my direction, the red ink has overflowed like the Nile in flood – to over $7 trillion.

During the two terms of George W. Bush alone, the feds have borrowed more money from foreign governments and banks than all other American administrations put together, from 1776 to 2000. And more debt will be added in the eight Bush years than in the previous two hundred. The trade deficit, too, more than tripled since I’ve been at the Fed, from 150.7 to 756.8 billion, and will reach $830 billion in 2006. When I came to power, the United States was still a creditor. Now, it is a debtor, with more than $11 trillion worth of U.S. assets in foreign hands, a more than 500% increase since 1987.

Who can argue with such a record? Who can compete with it? Who would want to?

America's dark materials STARE at something long and hard enough, and it will begin to swim before your eyes. Economists have been scrutinising America's current-account deficit for years now, and they are no closer to agreeing on what they are looking at. Now two economists at Harvard doubt whether the deficit even exists.

MS, AOL and Yahoo! caved to Feds' fishing expedition
But on closer examination, Google's reasons for fighting the subpoena are less altruistic and more to do with its familiar refrain, of protecting "commercially sensitive information". And as a justification, that's almost as redundant as the DoJ's fishing expedition itself, when we remember that AOL uses Google search technology. The Feds already have what they want.

Chart of the day

Long term T-Bond Rate minus Discount Rate

Iran's Bomb There's been a lot of talk recently about Israel and/or the United States bombing the nuclear facilities in Iran. I wouldn't worry about that. I believe they are both bluffing.

Nuclear Showdown With Iran
So, at least for now, it appears President Ahmadinejad has decided to do a North Korea: that is, defy the western powers, dig in, and be ready to fight to the last man.

'Green' Measures Key to Earth's Future, Report Says

Iran calls for oil output cut
Iran has called for a cut in global oil production while simultaneously preparing to shift its foreign assets out of Europe.

Quick Overview

• U.S. Consumer sentiment rose for a third straight month from 91.5 to 93.4, according to the University of Michigan’s monthly consumer sentiment index released Friday.
  

• Dick Cheney said on Friday that if avian flu were to arrive in the United States, it could deal a blow to the U.S. economy because of disruptions to businesses, schools and transport.
  

• The Conference Board said on Friday its leading economic indicator for Mexico fell 0.3 percent in November, after showing no change the previous month. Lower oil prices brought less cash into the country.
  

• Retail sales in the U.K. were up 0.4% in December
  

• Canada's wholesale sales were down 0.2% in November. YoY sales were up 7.2%.
  

• Consumer spending in France was down 1% in December.
  

• Retail sales in New Zealand were up 0.9% in November.
  

• The Associated Press reported that Iran was moving its currency reserves out of European banks to undisclosed locations.
  

• The USDA said there were 11.804 million head of cattle on feed, up 4.5% YoY. December placements were up 2.7% and YoY marketing’s were down 3.5%.
  

• U.S. Cocoa grindings were 96,673 tons in the fourth quarter, down 2.2% YoY.
  

• Sugar is expected to post its fourth consecutive production shortage in 2006-2007, and Dow-Jones Newswire said that Brazil's sugar crop is in need of rain.
  

Q&A | Wireless pioneer looks to the future
At 72, Irwin Mark Jacobs knows more about cellphones than any teen whiz kid ever will.

Shipping Rates for Coal, Ore Fall to Five-Month Low on Supply
The cost of shipping commodities such as iron ore and coal fell to its lowest in more than five months because of a buildup of vessels available for hire in the Pacific and Atlantic Oceans.

Why We Fight

Google Rebuffs Feds on Search Requests
Google Inc. is rebuffing the Bush administration's demand for a peek at what millions of people have been looking up on the Internet's leading search engine

Quick Overview

• The number of U.S. workers filing initial unemployment claims fell 36,000 last week to 271,000, the lowest level since April 2000, the Labor Department said.
  

• U.S. New housing starts fell 8.9% in December from November, the Commerce Department reported Thursday. For all of 2005, housing starts were up 5.6% and construction of single family homes hit a new record high of 1.714 million units.
  

• The Philadelphia Federal Reserve said that its index of regional manufacturing dropped from 10.9 to 3.3 in January -- still a sign of growth.
  

• The Federal Reserve has lifted interest rates to more proper levels amid solid growth, policy-makers said on Thursday in remarks that hint the U.S. central bank will only raise rates one or two more times.
  

• The U.S. Department of Energy said that:
  Supplies of crude oil were up 2.7 million barrels to 321.4 million barrels.
  Supplies of unleaded gasoline were up 2.8 million barrels
  Supplies of heating oil were up 1.0 million barrels.
  Supplies of underground natural gas were down 46 billion cubic feet to 2.575 trillion cubic feet.
  

• YoY Consumer prices in the Euro zone were up 2.2% in December.
  

• YoY Argentina's economy grew 9.1 percent in November, faster than expected.
  
  

• Brazil posted a record current account surplus of $14.19 billion for 2005, up from $11.71 billion in 2004.

43% of first-time home buyers put no money down
The median first-time home buyer scraped together a down payment of only 2% on a $150,000 home in 2005, the NAR found.

Quick Overview

• U.S. Consumer prices fell 0.1% in December as energy prices declined, the Labor Department reported Wednesday.
  
  

• The economy chugged ahead as the New Year opened with manufacturing picking up, employment improving and retail sales rising, the Federal Reserve reported Wednesday.
  
  

• Foreign investors raised their holdings of U.S. assets by $89.1 billion in November.
  
  

• The national average retail price of diesel fuel fell 3.6 cents to $2.449 a gallon, the Department of Energy reported Tuesday following its weekly survey.
  
  

• The U.K. unemployment rate increased from 4.6% to 5.0%.
  

• YoY Consumer prices in Canada were up 2.2% in December.
  

• YoY New Zealand, consumer prices were up 3.2%.
  

• London inventories of copper are at 104,375 tons.
  

Gore Is Right Former vice president Al Gore gave what I believe to be the most important political speech in my lifetime, and the New York Times, "the newspaper of record," did not report it. Not even excerpts.

Shell may pull out of Niger Delta after 17 die in boat raid

US Constitution in Grave Danger
Can it be true that any president really has such powers under our Constitution? If the answer is "yes" then under the theory by which these acts are committed, are there any acts that can on their face be prohibited? If the President has the inherent authority to eavesdrop, imprison citizens on his own declaration, kidnap and torture, then what can't he do?

Quick Overview

• U.S. Industrial production was up 0.6% in December.
  

• U.S. Consumer confidence slid sharply in the latest week as prices of heating fuels and gasoline rose, ABC News and the Washington Post said on Tuesday in a weekly survey.
  

• The New York Federal Reserve's index of regional manufacturing dropped from 26.28 to 20.12.
  

• Canada's index of leading indicators increased 0.5% in December.
  

• YoY consumer prices in the U.K. were up 2.0%
  

• Japan's Cabinet Office said that a quarterly index of consumer confidence increased from 44.8 to 48.2, the highest reading in 14 years.
  

• China's tax chief said on Tuesday the economy had grown by 9.8 percent in 2005, but comments by a senior commerce ministry official and analysts suggested the pace of expansion could slow this year, if only slightly.
  
  

• Crude-oil prices charged to a three-and-a-half month high above $66 a barrel Tuesday amid growing unease about the possibility of sanctions against Iran, OPEC's second-largest producer, because of its nuclear ambitions.
  

• The International Energy Agency said that they are expecting world oil demand to increase 2.2% in 2006, up from a 1.3% increase in 2005.
  

• The International Coffee Organization increased its estimate of the world's 2006-2007 coffee crop from 120 to 121 million bags. They expect World consumption, at 119 million bags in 2006 and 120 million in 2007.
  

• The Green Coffee Association said that December’s U.S. Coffee stocks were down 208,465 bags to 4.6 million bags.
  

Can farms yield fuel and feed the world?
Some experts scoff at the idea of corn shortages, but others say it is possible, at least to some degree. Wendy Wintersteen, dean of the College of Agriculture at Iowa State University, said that possibly as early as this summer, "we will have areas of the state we would call corn-deficient," because there will not be enough for livestock feed as well as ethanol plants

Quick Overview

• U.S. Producer prices were up 0.9% in December and up 5.4% YoY. Excluding food and energy costs, prices were up 0.1% in December.
  

• U.S. retail sales were up 0.7% in December and up 7.3% in 05
  

• Japan's machinery orders were up 2.3% in November.
  

• YoY Canada's new vehicle sales were up 3.1% in November
  

• Dow-Jones Newswires reported the harvest at U.S. Sugar Corporation will be down 25% this year, because of Hurricane Wilma and last weekend's freeze.
  

• China's foreign exchange reserves jumped $49.9 billion in the fourth quarter of 2005 to a record $818.9 billion.
  

• China's government said that they imported 5.3% less oil in 2005, thanks to conservation efforts.
  

• YoY Mexican gross fixed investment, a measure of spending on machinery, equipment and construction, rose 7.3 percent in October.

Opec nations ‘set for record oil revenues’
It’s just been a phenomenal transfer of wealth from consuming to producing nations,” said Francisco Blanch, analyst at Merrill Lynch.

Quick Overview

• U.S. jobless claims were up 17,000 last week to 309,000
  

• The U.S. trade gap shrank more than expected in November. The gap narrowed to $64.2 billion during the month from a record $68.1 billion in October, the Commerce Department reported in Washington
  
  

• The unemployment rate in Australia was unchanged in December at 5.1%
  

• Germany's GDP was up 0.9% in 2005.
  

• Crude oil approached a three-month high Thursday, approaching $65 a barrel, in part on concerns about Iranian oil.
  

• Minnesota officials are giving the state’s biodiesel industry another month to fix problems with the fuel that led to clogged fuel filters this winter, the Associated Press reported Thursday.
  

• The USDA's 2005-2006 U.S. ending stocks estimate for:
  Corn was increased from 2.419 to 2.426 billion bushels.
  Soybeans were increased from 405 to 505 million bushels.
  Wheat was increased from 530 to 542 million bushels.
  Sugar was reduced from 1.395 to 1.320 million tons.
  Cotton remained at 6.90 million bales.
  

• The USDA's soybean production estimate for Argentina and Brazil remained at 3.64 billion bushels.
  

• The USDA said that 41.37 million acres of winter wheat were planted last fall, up 2% YoY -- less than expected.
  

• Europe's cocoa grindings totaled 301,742 tons in the fourth quarter of 2005, up 4.7% YoY.
  

• The USDA reduced its estimate of Florida's 2005-2006 orange crop from 162 to 158 million boxes. The estimated juice yield was unchanged at 1.55 gallons a box at 42.0 degrees Brix.
  

• Inflation in Brazil slowed in 2005 for the fourth year in a row.

Report: Iraq war costs could top $2 trillion

Quick Overview

• YoY Mexican industrial production rose 3 percent in November.
  
  

• An index of leading indicators for Japan dropped from 81.8 to 60.0 in November
  

• A persistent fall in Japanese bank lending slowed in December to its smallest decline in nearly five years, a bright sign for business conditions because of a stronger economy and improvement in banks' financial condition.
  
  

• The U.S. Department of Energy said that:
  Supplies of crude oil were down 2.9 million barrels to 318.7 million barrels.
  Supplies of unleaded gasoline were up 4.5 million barrels
  Supplies of heating oil were up 1.0 million barrels.
  

Drier, Tainted Nevada May Be Legacy of Gold Rush The costs - to Nevada, its neighbors and even to the rest of the country - are only now coming into focus as diminishing ores foreshadow gold mining's eventual demise and a more urbanized West begins to express concerns over water shortages and mining's other legacies.

U.S. can open private mail in terrorism fight
"It was a big surprise," Goodman told Reuters. "The public should know that this is being done. Nobody whom I know had any idea that this was going on. And as far as I know, it's never been announced. It's never been revealed that this is being done."

Quick Overview

• The U.S. Commerce Department said that wholesale sales were down 0.7% in November while inventories were up 0.4%.
  

• U.S. Consumer confidence, steadily improving since last fall, rose in the latest week, ABC News and The Washington Post said on Tuesday.
  

• The national average retail price of diesel fuel rose 4.3 cents to $2.485 a gallon, the Department of Energy reported.
  

• Turkey said that they destroyed 306,000 birds in an attempt to stop the spread of bird flu.
  

• YoY retail sales in the U.K. increased 2.6% in December.
  

• Sales of new cars in Venezuela soared 70 percent in 2005 from a year earlier as the economy expanded 9.4 percent and consumer spending grew, the Venezuelan Automobile Chamber said on Tuesday.

Shanghai now the world's largest cargo port
It only took Shanghai port five years to double cargo handling capacity from 200 million tons to 400 million tons.

Cooling housing market may trigger US recession next year, Soros warns
Soros, the chairman of New York-based Soros Fund Management, said the biggest risk to the US economy was that the Federal Reserve might raise interest rates too high, stifling the housing market. "That's why I expect the recession to occur in 2007."

New call to impeach Blair over Iraq
"To go to war on what turns out to be false grounds is something that no one should be allowed to walk away from," he said.

U.S. Healthcare Tab Grows Faster Than the Economy

America's healthcare bill rose to nearly $2 trillion in 2004, or about $6,280 for every man, woman and child, a team of government economists reported today.

Chart of the day

Dow Theory

Quick Overview

• The Dow-Jones industrial average closed above 11,000 for the first time in more than four years.
  

• Cocoa grindings in Germany totaled 70,332 tons in the fourth quarter of 2005, up 23% YoY.
  
  

• Retail sales in Australia were down 0.1% in November, weaker than expected.
  

• Officials at the G-10 meeting said the world economy is in good shape and may grow more in 2006 than in 2005.
  

• The German government approved a 25 billion Euro spending program designed to give momentum to a weak economic upturn.
  
  

• Japanese Finance Minister Sadakazu Tanigaki urged the Bank of Japan to use caution in deciding when to end its ultraloose monetary policy, even though he expects the nation's economy to shake off deflation in 2006

Chart of the day

NYSE Advancing Issues (Weekly)

Quick Overview

• The unemployment rate fell to 4.9 percent from 5 percent and labor costs rose, the Labor Department said. The December gain followed figures showing 71,000 more jobs than first reported for November and October. For all of 2005, the U.S. gained roughly two million jobs
  

• Bloomberg reported that U.S. consumption of gasoline, heating oil, and other fuels hit a new record high in December. While projections differ, market watchers on average expect oil prices to consolidate around $55 to $60 a barrel this year.
  

• Japan's consumer prices will likely start showing a lasting rise and the economy is making steady progress toward ending deflation thanks to a balanced recovery, the Bank of Japan's chief economist said on Friday.
  
  

• Canada's unemployment rate rose from 6.4% to 6.5% in December. In 2005, Canada gained 233,000 jobs.
  

• The unemployment rate in the Euro zone was unchanged at 8.3% in November. Unemployment in the EU-25 was also unchanged at 8.5%.
  

• YoY Industrial production in Germany was up 4.7%.