Updates resume Sep. 16

Judge strikes down part of Patriot Act
A federal judge struck down a key part of the USA Patriot Act on Thursday in a ruling that defended the need for judicial oversight of laws and bashed Congress for passing a law that makes possible "far-reaching invasions of liberty."

Quick Overview

• U.S. non-farm payrolls fell 4,000 in August, the first decline in four years. Payrolls for June and July were reduced by 81,000. Most job losses came from the auto and construction sectors.
  

• The weak U.S. housing sector warrants close attention to assess the economic outlook as well as its recent disruptive effects on financial markets, Philadelphia Federal Reserve Bank President Charles Plosser said on Saturday.
  
  
  

• Struggling lender Countrywide Financial will cut 12,000 jobs as it struggles to deal with challenging conditions in the mortgage industry, the company said.
  
  

• Canada’s unemployment rate was unchanged at 6.0% in August, still the lowest in 33 years.

Quick Overview

• Bank of Canada reverses liquidity move by tightening collateral requirements for financial institutions participating in special liquidity operations, says credit markets have settled down.
  

• Retail sales increased 2.9% in August, the International Council of Shopping Centers said, exceeding the group's forecast of 2.5%.
  

• The U.S. Labor Department said that jobless claims were down 19,000 last week to 318,000, less than expected.
  

• The Bank of England met and kept its interest rate unchanged at 5.75%, as expected.
  

• China increased reserve requirements for banks from 12.0% to 12.5% -- the seventh increase this year.
  

• Australia's unemployment rate was unchanged at 4.3% in August.
  

• The European Central Bank kept its interest rate unchanged at 4.0%, as expected.
  

• Lehman Brothers Holdings Inc. and National City Corp. said more than 2,000 workers will be laid off as the financial institutions scale back their struggling mortgage businesses.
  

• Manufacturing orders in Germany fell 7.1% in July, weaker than expected.
  
  

• The Labor Department said that non-farm productivity was up an annual rate of 2.6% in the second quarter of 2007, the best gain in almost two years. Unit labor costs were up an annual rate of 1.4% in the second quarter, less than expected.
  

• U.S. ethanol demand is at a record high of 443,000 barrels a day in June.
  U.S. ethanol production capacity is currently 6.7 billion gallons, rising to 6.6 billion gallons in 2009.
  

• The U.S. DOE said that:
  Supplies of crude oil fell 3.9 million barrels to 329.7 million barrels.
  Supplies of gasoline fell 1.5 million barrels.
  Supplies of heating oil rose 1.2 million barrels.
  Supplies of underground natural gas rose 36 billion cubic feet to 3.005 trillion cubic feet.
  U.S. refinery use rose from 90.3% to 92.1%
  Gasoline demand rose 0.5% YoY
  Distillate demand was unchanged YoY.
  

• Allendale expects the U.S. Department of Agriculture to raise its 2007/08 marketing year production estimates for corn, soybeans and wheat. The report is next Wednesady.
  FC Stone also sees a slight increase in corn and soybean production estimates.
  
  

• USDA Chief Economist Keith Collins says growing demand for ethanol is not only driving grain prices higher in the U.S., but around the world.
  
  

Sean Shammity vs. Ron Paul

Quick Overview

• The National Association of Realtors said pending home sales were down 12.2% in July -- the lowest in six years.
  

• The Fed’s Beige Book did note, that tighter lending standards were having a noticeable effect on housing and that is a concern.
  

• The Bank of Canada kept its interest rate unchanged at 4.50%,
  

• The Reserve Bank of Australia kept its interest rate unchanged at 6.50%,
  

• Retail sales volume in the Euro zone (13) rose 0.1% in July.
  

Quick Overview

• The Institute of Supply Management's index of manufacturing fell from 53.8 to 52.9
  

• U.S. Construction spending was down 0.4% from June.
  

• GDP in Australia rose 0.9% in the second quarter and up 4.3% YoY.
  

• GDP in the Euro zone rose 0.3% in the second quarter and up 2.5% YoY.
  

• The International Cocoa Organization said world production of cocoa in 2006-2007 totaled 3.435 million tons. Resulting in 1.708 million tons of ending stocks or 48% of annual use.
  

• South African gold production fell an annual 7.5% in the second quarter as the quality of ore declined, the country's Chamber of Mines said.
  
  

• December Wheat rose 30 cents (limit) to 805 ½.. Traders had expected India to buy only a portion of the 530,000 tonnes offered at a tender last week. Instead, India bought 795,000 tonnes over the weekend, and Russia is considering limiting wheat exports to protect their domestic supply.
  

UN says rate of livestock breed extinction is 'alarming'
Among the breeds the International Livestock Research Institute says are most at risk are the Ankole cattle, whose drought resistance and rich milk made them prized animals in East and Central Africa until the arrival of European dairy cows.
Similarly, the Red Maasai sheep of East Africa, which have developed genetic resistance to a common parasite, have almost disappeared since the introduction of Dorper sheep from South Africa 15 years ago, the research institute says.

Panama begins canal expansion The $5.25-billion expansion will accommodate a new class of huge ships capable of carrying more than twice the number of containers as the vessels that currently transit the waterway. Completion is set for 2014 to coincide with the 100th anniversary of the inauguration of the original canal.

Help with the mortgage
A rising tide of defaults among borrowers with shaky credit histories has, thanks to the way that their debts have been securitised and sold on globally, triggered chaos in the world's credit markets as asset-holders struggle to re-evaluate their risk.

Quick Overview

• U.S. GDP rose 4.0% in the second quarter, YoY GDP rose 1.9% in the second quarter.
  

• Retail sales in Japan were down 2.2% in July.
  
  

• The Philippine Economy Grew 7.5 % in the Second Quarter, at the fastest pace in two decades.
  
  

• China's government is concerned about reduced autumn grain output due to continuing drought and floods, as rising food prices have already pushed inflation above target, the country's top economic planner said in a report to the legislature.
  
  

• The International Atomic Energy Agency's top inspector said that they had formed an agreement with Iran that would remove Iran as a threat for developing nuclear weapons.

Soybean Stampede Sends Argentine Cattle North to Face Piranhas
The comedown is unfolding in Argentina, where ranchers are driving their world-famous cattle herds to the swamps and scrubland of the country's north as they turn the grassy plains of the central Pampas over to more-profitable soybeans and corn.

Japan's Warp-Speed Ride to Internet Future
Broadband service here is eight to 30 times as fast as in the United States -- and considerably cheaper

Top Fund Managers Made 22,300 Times Average Wage, Study Says
The study's authors said top hedge-fund managers are making more in a fraction of an hour than a typical worker makes in a year. The hedge-fund chiefs average $12.6 million a week, or $210,700 an hour based on a 60-hour week. That's $35,100 every 10 minutes, compared with $29,500 a year for the average worker.

Quick Overview

• Confidence in Germany fell from 8.5 to 7.6 in August, weaker than expected.
  
  

• The U.S. DOE said that:
  Supplies of crude oil were down 3.5 million barrels to 333.6 million barrels.
  Supplies of gasoline were down 3.6 million barrels.
  Supplies of heating oil were up 600,000 barrels.
  Refinery use fell from 91.6% to 90.3%.
  Gasoline demand was up 0.5% YoY
  Distillate demand was up 0.7% YoY.
  

• Wheat prices rose 20.24 cents because of continued concerns for tightness ahead, ideas the spring wheat harvest pressures are winding down, that end users are caught without coverage, and some concerns for dryness in Australia.

Lib Dem plan to ban petrol-driven cars The 10-point plan on climate change also included a commitment to 100% carbon-free non-nuclear generation by 2050 and the introduction of "polluter pays" green taxes.

Quick Overview

• U.S. consumer confidence in August fell by the most since the period immediately following Hurricane Katrina, the New York-based Conference Board said.
  

• YoY S&P’s index of U.S. housing prices fell 3.2% in the second quarter. U.S. home builders said tightening lending standards have made it even harder for them to unload inventories of unsold houses.
  
  

• The Ifo Institute's index of business confidence fell from 106.4 to 105.8
  

• GDP in South Africa rose 5.0% in the second quarter.
  

• In a survey producers indicated that they plan to plant corn on 8.6% less area for the 2008 season to 84.9 million acres from 92.9 million this season.
  They also indicated that they plan to plant soybeans on 13% more area for the 2008 season to 72.6 million acres from 64.1 million this season.
  

No update today because of technical trouble.

Quick Overview

• U.S. existing home sales declined 0.2% from the prior month to an annual rate of 5.75 million. There is a 9.2 month supply of single family homes for sale, the most in over 15 years.
  

• Risks to the Canadian economy have increased as the result of turmoil in the credit markets, the Bank of Canada said.
  

• The USDA said that:
  59% of the corn crop was rated good to excellent, up from 58% last week ago.
  55% of the soybean crop was rated good to excellent, up from 54% last week ago.
  49% of the cotton crop was rated good to excellent, down from 51% last week ago

Amerika, 2007
At least the inhabitants of "Amerika" could point out that they had been conquered by a wily and resourceful foreign enemy. What's our excuse?

Quick Overview

• Officials from the Federal Reserve on Saturday warned of dangers from a rising tide of trade disputes and the harmful impact on what one otherwise termed a "resilient" U.S. economy
  

• U.S. Durable goods orders rose 5.9% in July, more than expected. Excluding transport orders rose 3.7%.
  

• The U.S. Census Bureau said new home sales were at an annual rate of 870,000 in July, up 2.8% from June's rate. So far in 2007, new home sales are down 21% YoY.
  

• U.K.'s GDP rose 0.8% in the second quarter and up 3.0% YoY.
  

• An index of manufacturing and services in Europe fell from 57.5 to 57.2 in August.
  

• Smithfield Foods received an order to deliver 60 million pounds of pork to China by the end of December.
  

• Pork shipments from 15 U.S. production plants have been suspended by China this month
  The Chinese say they have found traces of Ractopamine in the meat from the plants. Ractopamine is legal in the U.S. but banned in China.
  

• Dubai gold sales rose 33% in July despite high prices.
  

• The International Sugar Organization estimates 2007-2008 world sugar production at 169.6 million tons, 10.8 million tons over consumetion.
  

• Brazil's Ag Ministry estimates the current coffee crop at 32.6 million bags.
  

• The International Copper Study Group said that in the first five months of 2007, world usage of copper outpaced production by 300,000 tons.
  
  

• In China, the era when overseas executives could rely on translators is ending. The Chinese government now requires top executives at securities firms to pass written and oral exams in Mandarin, the national tongue, and Chinese managers expect meetings to be conducted in their own language.
  
  
  

• Pro Farmer, estimates 2007 U.S. corn production at 13.109 billion bushels with a yield of 153.47 bushels per acre. The firm pegged U.S. soybean production at 2.658 billion bushels with a per acre yield of 42.0 bushels.
  

Quick Overview

• U.S. jobless claims were down 2,000 last week to 322,000.
  

• Canada's wheat crop is estimated at 20.3 million tons, down 20% YoY.
  

• The Bank of Japan voted 8 to 1 to keep interest rates unchanged at 0.50%.
  

• The U.S. Department of Energy said that underground supplies of natural gas were up 23 billion cubic feet to 2.926 trillion cubic feet.

Dollar May Fall to Record Within Six Months, Goldman Sachs Says
The Fed will lower its benchmark interest rate by 0.75 percentage point to 4.5 percent by year-end, according to Goldman Sachs.
The dollar will fall also because foreign investors will reduce purchases of higher-yielding corporate bonds, said Nordvig.

China fear over 'tainted' US soya
US soya bean exporters said China was trying to "balance things out".

Quick Overview

• The Bank of Japan at its regular 2-day policy meeting that begins today is unanimously expected to leave its monetary policy unchanged.
  

• Industrial new orders in the Euro zone rose 4.4% in June, stronger than expected.
  The USDA said there were 459.8 million pounds of frozen pork in storage, up 10% YoY.
  
  

• The USDA said there were 849 million pounds of frozen orange juice concentrate in storage, down 15% YoY.
  
  

• The U.S. Department of Energy said that:
  Supplies of crude oil rose 1.9 million barrels to 337.1 million barrels.
  Supplies of gasoline fell 5.7 million barrels
  Supplies of heating oil supplies rose 600,000 barrels.
  Gasoline demand was up 0.6% YoY
  Distillate demand was up 2.1% YoY
  

Updates resume August 22

Chart of the Day

Fed Free Reserves

Look Out. This Crunch Is Serious
Incipient panic has reigned in U.S. financial markets over the past couple of weeks, and no wonder. Some hedge funds have blown up, the country's second-largest mortgage lender has come close to collapse and stocks have fallen. On Friday, the Federal Reserve Bank lowered a key interest rate to help calm things down.

Quick Overview

• U.S. Housing starts were down 6.1% from June's pace and down 20.9% YoY.
  

• U.K.'s retail sales rose 0.7% in July
  

• YoY Consumer prices in the Euro area 13 were up 1.8%
  

• The DoE said that underground supplies of natural gas were up 21 billion cubic feet last week to 2.903 trillion cubic feet.
  
  
  

• Gold demand in India rose 72 percent in the first half of the year to 528 tonnes, and China's consumption rose 11 percent so far in 07.
  
  

Quick Overview

• St. Louis Fed President William Poole said financial market disruptions had not yet hit the U.S. economy and the central bank should not act before its meeting on Sept. 18, Bloomberg television said.
  
  

• U.S. Consumer prices rose 0.1% in July, and up 2.4% YoY.
  
  

• The U.S. Treasury Department said that foreign net capital inflow totaled $58.8 billion in June, down from $107.3 billion in May.
  

• The Federal Reserve said that U.S. industrial production rose 0.3% in July.
  

• The New York Federal Reserve's regional index of manufacturing fell from 26.46 to 25.06.
  

• U.K.'s Unemployment rate improved from 5.6% to 5.4%.
  

• The U.S. Department of Energy said that:
  Supplies of crude oil fell 5.2 million barrels to 335.2 million barrels,
  Supplies of gasoline fell 1.1 million barrels
  Supplies of heating oil rose 900,000 barrels.
  Gasoline demand rose 0.4% YoY
  Distillate demand rose 2.5% YoY.

Basis Capital Says Yield Fund Loss May Top 80%
The funds ran into trouble by investing in the unrated, riskiest portions of collateralized debt obligations and then leveraging the investment. The portions, also known by bankers as ``toxic waste,'' are first in line for any losses when borrowers fall short on mortgage payments.

Sentinel warns of losses if clients panic
"The (companies) who have money with Sentinel are members of the various exchanges. So the exchanges have an interest to make sure there is no spillover which will effect them," the official said. "They're not doing this purely for charity."

Sentinel Management Group Seeks to Halt Redemptions
Sentinel's clients include so-called futures commission merchants, businesses that manage buy and sell orders for commodities futures contracts. FCMs are required by the CFTC to keep their customers' money segregated from funds they invest on their own behalf. By that measure, Sentinel is 17th in terms of customer money for U.S. FCMs, according to July 31 data from the CFTC.

Flush with Profits from the Iraq War, Military Contractors See a World of Business Opportunities

Since the launch of the "global war on terror," the administration has systematically funneled billions of dollars in public money to corporations like Blackwater USA , DynCorp, Triple Canopy, Erinys and ArmorGroup. They have in turn used their lucrative government pay-outs to build up the infrastructure and reach of private armies so powerful that they rival or outgun some nation's militaries.

Quick Overview

• U.S. Producer prices rose 0.6% in July and up 4.0% YoY. Excluding food and energy, prices rose 0.1% in July and up 2.3% YoY.

• GDP in the Euro area 13 rose 0.3% QoQ, and up 2.5% YoY.
  

• U.K.'s Consumer prices rose 1.9% in July.
  

• Japan's tertiary index of services rose 0.1% in June.
  

• Retail sales in China rose 16.4% YoY
  

• Retail sales in New Zealand's fell 0.4% in June.
  

• The world will see a sugar surplus of 11 million metric tons in 2007-08, surpassing the large 2006-07 world surplus of 10 million tons, U.K.-based Czarnikow.
  
  

Quick Overview

• U.S. retail sales rose 0.3% in July.
  

• Japan GDP rose 0.1% QoQ
  

• Consumer prices in China rose 5.6% YoY, the most in 10 years. China's CPI is mainly being pushed higher by food costs.

Time to sell or what? Maybe check an 'insider' index
He has compiled this index back to the mid-1970s, and found it to have an impressive record in predicting the market's subsequent 12-month return.

Crunch time
The ECB’s move eased the cash crunch—at least temporarily. Overnight rates dropped back to the central bank’s target rate of 4%, and economists praised the speed and effectiveness of its intervention. However, the provision of liquidity is only a short-term measure to restore calm. Even cuts in interest rates, which financial markets are pricing in increasingly aggressively, would not necessarily address the underlying problem. Restoring faith in American mortgage markets, and the cornucopia of investments derived from them, is the bigger challenge.

China's agriculture minister says drought poses 'grave threat' to grain harvest
Drought has hit about 110 million hectares (270 million acres) of arable land, according to the Office of the State Flood Control and Drought Relief Headquarters.
Sun said during a tour of Jiangxi province, where 866,000 hectares (2.1 million acres) of crops have been affected, that the conditions pose a "grave threat" to the autumn harvest, the China Daily reported.

Quick Overview

• The Federal Reserve joined the European and Asian Central Banks to add cash ($19 billion) to the banking system.
  
  

• YoY Japanese wholesale prices rose 2.1 percent in July -- for the 41st straight monthly increase.
  
  

• The idea that Beijing might use its $1.33 trillion currency reserves as a bargaining chip in trade talks with Washington is (also) unsettling markets.
  
  

• The area of floating ice in the Arctic has shrunk more than in any summer since satellite tracking began in 1979, experts said.
  
  
  

• Japanese corporate failures rose 15.6% in July.
  
  
  

• The USDA's 2007-2008 U.S. ending stocks estimate for:
  Corn rose from 1.502 to 1.516 billion bushels.
  Soybeans fell from 245 to 220 million bushels.
  Wheat fell from 418 to 404 million bushels.
  Sugar rose from 1.377 to 1.388 million tons.
  Cotton fell from 5.90 to 5.80 million bales.
  
  

• The USDA's 2007-2008 world ending stocks estimate for:
  Corn fell from 108.4 to 102.2 million tons.
  Soybeans fell from 51.9 to 51.6 million tons.
  Wheat was fell 116.6 to 114.8 million tons.
  Cotton rose from 50.8 to 51.5 million tons.

Bernanke, Paulson Were Wrong: Subprime Contagion Is Spreading
``Housing created a lot of ancillary economic activity and jobs, and now we are in the reverse process,'' says Paul Kasriel, chief economist at Northern Trust Corp. in Chicago and a former Fed economist.

BOJ pumps 1 trillion yen into money markets in sync with ECB, Fed
The central banks of Japan, the United States and Europe took a coordinated action to provide liquidity for the first time since the Sept. 11, 2001, terrorist attacks on the United States. The size of the BOJ's money injection was larger than usual, according to money market traders.

Quick Overview

• BNP Paribas (France's largest bank) froze investor redemptions from three funds. The news caused more fears about the continued run on funds tied to US subprime mortgages.
  
  

• The European Central Bank loaned 94.8 billion Euros to tone down a credit crunch.
  
  

• The U.S. Treasury said the current $8.965 trillion debt limit will be reached in October.
  
  

• Australia's unemployment rate remained at 4.3%.
  

• New Zealand's unemployment rate improved from 3.7% to 3.6%.
  

• The Bank of Korea raised its rate from 4.75% to 5.00%.
  
  

• The Florida Department of Citrus said inventories of frozen orange juice totaled 73.6 million gallons, down 15% YoY
  

• The International Sugar Organization expects a 2007-2008 world production surplus of 10 million tons.
  
  

• The U.S. Department of Energy said supplies of natural gas rose 42 billion cubic feet to 2.882 trillion cubic feet.
  

China's Trade Surplus Likely Jumped Almost 60 Percent in July
``As the U.S. election approaches, the trade relationship with China will get more attention and tensions become more vocal,'' said Adrian Foster, director of capital markets at Dresdner Bank AG in Beijing. ``The big trade surplus number and product-safety concerns are adding fuel to the fire.''

Quick Overview

• U.S. wholesale sales rose 0.6% in June
  

• U.S. Inventories rose 0.5%.
  

• The California Air Resources Board mandated that gasoline sold in the state include 10% ethanol by the end of 2009. California consumed 1 billion gallons of ethanol this year and the new rules will likely double that figure.
  

• Wheat rose to a record in Chicago, on speculation that demand for U.S. grain will climb because of unfavorable weather for crops in the U.S., Europe, Canada, Australia, Ukraine and Argentina.
  

• Dow-Jones News said this year's drought in China will mean "China is likely to import millions tons more of soybeans in the coming crop year than earlier expected."
  

• The U.S. Department of Energy said that:
  Supplies of crude oil fell 4.1 million barrels last week to 340.4 million barrels.
  Supplies of gasoline fell 1.7 million barrels
  Supplies of heating oil rose 1.9 million barrels.
  Demand for gasoline was up 0.8% YoY
  Demand for distillate rose 4.2% YoY
  

China threatens 'nuclear option' of dollar sales
The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

US House Approves Renewable Energy Tax Incentives
The Renewable Energy and Energy Conservation Tax Act of 2007 includes tax credits and bonds to promote investment in renewable energy production from wind, solar, geothermal, cellulosic ethanol and biofuels, and other critical energy conservation initiatives. The measure passed by a vote of 221-189.

Quick Overview

• U.S. Productivity rose 1.8%.
  

• U.S. Unit labor costs rose 2.1%.
  

• The Fed kept the federal funds rate unchanged and said that while tightening credit conditions had increased risks, inflation was still its main concern.
  

• YoY Retail sales in the U.K. were up 3.1%.
  

• The International Coffee Organization left its estimate of 2007-2008 world coffee production unchanged at 112.0 million bags. World consumption was raised from 119.5 million bags to 120 million bags.
  
• Australia's central bank announced Wednesday it is raising official interest rates by one-quarter percentage point to 6.5 percent — the first rate movement in nine months.
  

• Japan's bank lending rose 0.3% in July.
  

• Japan's July foreign reserves hit record high of $923 bil.
  

Quick Overview

• The U.K.'s manufacturing index increased from 103.1 to 103.3 in June.
  
  

• The USDA said:
  56% of the corn crop is rated good to excellent, down from 58%
  56% of the soybean crop is rated good to excellent, down from 58%
  69% of the spring wheat crop is rated good to excellent, up from 68%.
  54% of the cotton crop is rated good to excellent -- unchanged.
  

U.S. Housing Is Among `Biggest Bubbles,' Rogers Says
``This is the only time in world history when people were able to buy houses with no money down and in fact, in some cases, the builders gave them money for a down payment,'' Rogers said. ``So this bubble is the worst we've had in housing and it's going to be the worst before its over cleaning it out.''