Quick Overview

• (FT)The decline in oil prices and the rally in the dollar was "encouraging", Ben Bernanke said, suggesting the Federal Reserve thinks global inflationary pressures could be starting to ease.
  

• Industrial new orders for the Euro area fell 0.3% in June.
  

• Canada anticipates wheat production will rise 27% this year to 25.4 million tons. They also estimated that soybean production will be up 17%, but corn production will fall 15%.
  

• The USDA said there were 9.869 million head of cattle on feed as of August 1st, down 4.2% YoY. July placements were up 2.4% YoY and marketing’s were up 1.1%.
  

• The USDA said there were 492.2 million pounds of frozen pork in storage on July 31st, up 8% YoY. Frozen pork bellies totaled 59.2 million pounds, up 87% YoY.
  

• The USDA said there were 1.42 billion pounds of frozen orange juice in storage, up 68% YoY.
  

• Indonesia, the world's biggest exporter of tin, has confirmed plans to limit production of the commodity in a bid to support prices and sustain the local industry

U.S. Mint Suspends Sales of American Eagle Gold Coins
It is the first time in two decades that the Mint halted sales of the coins, which are made of 22-carat gold from domestic mines. The coins also contain small amounts of alloy for hardening.

Quick Overview

• U.S. jobless claims were down 13,000 last week to 432,000.
  
• U.S. leading indicators fell 0.7% in July.
  
  
• The Philadelphia Feds regional index of manufacturing rose from -16.3 to -12.7 in August
  
  

• U.K.'s retail sales volume rose 0.8% in July
  

• YoY Canada’s consumer prices rose 3.4% in July.
  
  

• The International Cocoa Organization said 2007-2008 world cocoa production will be short of consumption by 88,000 tons, more than the 41,000 tons projected earlier.
  

• (WSJ) Fannie Mae and Freddie Mac need to refinance $225 billion of debt by the end of September. Investor interest may hinge on the details of any potential government bailout.

The Golden Value of Reliable Numbskulls
Gold is the "the epitome of human stupidity," said an opinion in the Telegraph newspaper. "A metal that is dug out of the ground at great cost to be reinterred in bank vaults as a protection against the same stupidity as caused it to be dug up in the first place."

Japan's Exports Rebound, China Becomes No. 1 Customer (Update2)
(Bloomberg) -- Japan's exports rebounded in July as China replaced the U.S. as the nation's largest customer.

Quick Overview

• Canada’s sales rose 0.5% from May, and up 4.0% YoY
  

• Shanghai equities made their biggest daily gain in four months as optimism rose the Chinese authorities would implement a stimulus plan.
  

• The U.S. DOE said:
  Supplies of crude oil rose 9.4 million barrels to 305.9 million barrels -- more than expected. Supplies of gasoline fell 6.2 million barrels
  Supplies of heating oil supplies rose 600,000 barrels.
  Refinery use dropped from 85.9% to 85.7% of capacity.
  Gasoline demand fell 1.6% YoY
  Distillate demand rose 3.3% YoY.
  

• The World Meteorological Organization said the world was cooler than at least the 5 previous years during the first half of 2008.
  

• Pirates hijacked a Malaysian oil tanker carrying palm oil in the waters off Somalia. It joins ships from Japan and Thailand that have been seized recently.

• Goldman Sachs reasserted a forecast that oil prices could hit a record $149 a barrel by the end of the year as supply struggles to meet rising demand in Asia.

Proportion and Distortion
Russia and Georgia

Rice: Military power is "not the way to deal in the 21st century"
The idea that the U.S. can, should and must be, more or less, in a state of permanent war, and can start wars in a whole host of circumstances having nothing to do with defending the country from an attack or imminent attack, is as close to an unchallengeable, bipartisan article of faith as it gets. We're a country that fights wars and uses military force in far more places and for far broader reasons than any other country in the world, by far. Again, regardless of one's views about whether our wars are really Good and Just -- even if one believes that what we drop on other countries are Good and Loving Freedom Bombs -- it's still just a fact that no country views military action as a more appropriate response in more situations than the U.S. does.

Quick Overview

• U.S. Labor producer price index rose 1.2% in July, and up 9.8% YoY
  
• U.S. housing starts were at an annual rate of 965,000 units in July, down 11% from June's pace, and down 30% YoY.
  

• Canada’s wholesale sales rose2.0%
  

• Japan kept the interest rate unchanged at 0.50%.
  

George, Stay Out of Georgia
by William S. Lind

It almost passes belief to think that the Bush administration, bogged down in two wars and planning a third (with Iran), might move toward a confrontation with Russia. Yet that is what the White House appears to be doing.

Quick Overview

• The USDA said:
  67% of the corn crop was rated good to excellent, the same as last week.
  62% of the soybean crop was rated good to excellent, down from 63% last week.
  56% of the spring wheat crop was rated good to excellent.
  48% of the cotton crop was rated good to excellent, up from 45% last week.
  

• Canada confirmed mad cow disease in a six-year-old beef cow from Alberta.

Dollar surge will not stop America feeling the effects of a global crunch US exports have risen 22pc over the past year, outstripping Chinese growth. The US non-oil trade deficit has shrunk by two fifths since 2002. It is now running at $300bn a year. This is 2.1pc of GDP.

Quick Overview

• U.S. industrial production rose 0.2% in July, better than expected
  

• The New York Federal Reserve's regional index of manufacturing rose from -4.92 to +2.77, better than expected.
  

• The University of Michigan's index of consumer sentiment rose from 61.2 to 61.7
  

• Canada’s manufacturing sales rose 2.1%.
  

• YoY China's vehicle sales rose 6.8% in July
  

• Hong Kong’s port handled 2.19 million TEU in July, an increase of 4.7%.
  
• Singapore reported an 11.6% increase in container movement in July.

Blowback From Bear-Baiting by Patrick J. Buchanan
Is not Western hypocrisy astonishing?

Quick Overview

• U.S. consumer prices rose 0.8% in July and 5.6% YoY.
  

• The National Association of Realtors said YoY the prices of single family homes fell 7.6% in the second quarter.
  

• GDP in the Euro area fell 0.2% in the second quarter.
  YoY Consumer prices in the Euro area rose 4.0% in July.

• YoY China's industrial production rose 14.7% in July

Quick Overview

• U.S. retail sales fell 0.1% in July, but rose 2.6% YoY.
  

• U.S. business sales rose 1.7% in June
  

• U.S. inventories rose 0.7%.
  

• Japan's GDP fell 0.6% in the second quarter.
  

• U.K.'s unemployment rate rose to 5.4%, up from 5.2% last month.
  

• YoY China’s retail sales rose 23.3% in July.
  

• The U.S. Department of Energy said:
  Supplies of crude oil fell 400,00 barrels to 296.5 million barrels.
  Supplies of gasoline fell 6.4 million barrels
  Supplies of heating oil rose 1.0 million barrels.
  Refinery use fell from 87.0% to 85.9% of capacity last week.
  Gasoline demand fell 1.9% YoY
  Distillate demand rose 4.3%.

Quick Overview

• U.S. Exports rose $6.4 billion to $164.4 billion in June - imports rose $4.0 billion to $221.2 billion. The result was $56.8 billion of net imports - narrowing the trade deficit unexpectedly.
  

• The Philadelphia Federal Reserve expects GDP to be up an annual rate of 1.2% in the third quarter, less than previously thought.
  

• Canada’s exports rose 3.1% in June - imports rose 2.0%.
  

• U.K.'s consumer prices rose 4.4% YoY .
  

• Japan's wholesale prices rose 7.1% YoY.
  

• The USDA's 2008-2009 U.S. ending stocks guess for:
  Corn was raised from 833 to 1,133 million bushels, more than expected. (Take notice when a bearish report fails to produce its expected results)
  Soybeans were reduced from 140 to 135 million bushels.
  Wheat was increased from 537 to 574 million bushels.
  Sugar was increased from 607,000 to 767,000 short tons.
  Cotton was reduced from 5.30 to 4.60 million bales.
  
  

• The USDA's 2008-2009 world ending stocks guess for:
  Corn was raised from 105 to 112 million tons.
  Soybeans were increased slightly from 48.9 to 49.3 million tons.
  Wheat was increased from 133 to 136 million tons.
  Cotton was reduced from 53 to 51 million bales.
  

• The USDA increased its beef production guess for 2008 from 26.6 to 26.7 billion pounds.
  

• The USDA increased the pork production guess for 2008 from 23.5 to 23.6 billion pounds.
  

The Russo-Georgian War and the Balance of Power By George Friedman

..Moscow did not have to concern itself with the potential response of the United States or Europe; hence, the invasion did not shift the balance of power. The balance of power had already shifted, and it was up to the Russians when to make this public. They did that Aug. 8.

Georgia: Vladimir Putin sends emphatic message of global importance
Mr Putin has demonstrated that the Kremlin will use force to protect the 25 million Russians who inhabit the Soviet Union's successor states, well beyond the mother country's borders.

Quick Overview

• YoY the U.K.'s producer prices rose 10.2% in July
  

• The USDA said:
  67% of the corn crop was rated good to excellent, up from 66% last week.
  63% of the soybean crop was rated good to excellent, the same as last week.
  53% of the spring wheat crop was rated good to excellent, down from 56% last week.
  45% of the cotton crop was rated good to excellent, down from 47% last week.

US dollar rallies as extent of worldwide recession becomes clearer
Arguably, the US is now super-competitive. Airbus and Volkswagen are shifting production plant across the Atlantic. US furniture and textile companies have stopped outsourcing to China, and are coming home.

The International Monetary Fund says the dollar has fallen 25pc to 30pc on a global basis, just as it did in the late 1980s. There was no shortage of dollar doomsters at that time, warning that America was finished - left behind by Japan and Germany. Events played out otherwise. America was on the cusp of a recovery.

Quick Overview

• U.S. worker productivity rose 2.2% in the second quarter.
  
• U.S. wholesale sales rose 2.8%
  
• U.S. Inventories rose 1.1%.
  

• Canada’s unemployment rate improved from 6.2% to 6.1%
  

• GDP in Italy fell 0.3%.
  

• Chile's state-run copper company said output fell 11.6 percent in the first half of the year amid heavy rains and labor strikes.
  

• The U.S. dollar had its highest close in five months.

Governments caused the credit crisis, but capitalism gets the blame
Greenspan now says the world faces a "once or twice in a century event". Faith in the financial system has been called into question. Taxpayers will have to rescue more banks. Missing is any hint of apology for his role in incubating this crisis as monetary overlord for 20 years.

Rice on possible IDF Iran strike: U.S. has no veto over Israeli military ops
"We don't say yes or no to Israeli military operations. Israel is a sovereign country," Rice said in an interview with Yahoo! News.

Quick Overview

• U.S. pending home sales rose 5.3% in June, better than expected. YoY pending home sales are down 12.3%.
  

• U.S. jobless claims rose 7,000 last week to 455,000, more than expected
  
  

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

• The European Central Bank kept its interest rate unchanged at 4.25%
  

• Japan’s machinery orders fell 2.6% in June.
  

• Australia’s unemployment rate remained at 4.3%.
  

• YoY South Africa gold production fell 12.3% in June.
  

• The U.S. Environmental Protection Agency denied the request from Texas to reduce the Renewable Fuels Standard this year, saying that they found no evidence that the mandate was causing "severe harm" to the economy.
  

U.S. June Consumer Credit Up $14.3 Billion, More Than Forecast
Consumers are using credit cards and loans to cover expenses as falling home values cause banks to restrict access to home- equity lines.

Hank the Great? Paulson Copies Frederick With Covered-Bond Plan
(Bloomberg) -- In 1769, short of funds to rebuild Prussia after attacks by Russia, Sweden and Austria, Frederick the Great let aristocrats, churches and monasteries raise money by pledging their estates as security to investors.

Quick Overview

• Consumer confidence in the U.K. fell from 62 to 51 in July.
  

• German factory orders fell 6.1% in June.
  

• The U.S. DOE said:
• Supplies of crude oil rose 1.7 million barrels to 296.9 million barrels
  Supplies of gasoline fell 4.4 million barrels
  Supplies of heating oil rose 1.1 million barrels.
  Refinery use fell from 87.2% to 87.0% of capacity last week.
  Gasoline demand fell 2.3% YoY
  Distillate demand rose 3.5% YoY.
  

• The port of Dalian, which is the largest in northeast China, saw its container throughput rise 23.8% YoY.
  
  

Quick Overview

• The Fed met and kept rates unchanged at 2.0%, as expected.
  

• The Institute of Supply Management's index of services increased from 48.2 to 49.5
  

• U.K.'s manufacturing output fell 0.5% in June.
  U.K.’s index of services rose from 47.1 to 47.4
  

• Retail sales volume in the Euro area fell 0.6% in June.
  

• Australia kept rates unchanged at 7.25%, as expected.
  

• (JoC) A national container fee may be the most equitable means available to raise the billions of dollars needed to build freight infrastructure, a congressional hearing is told.
  

• Between January and May, China exported 3.39 billion pairs of shoes, down 3.6% YoY.

Quick Overview

• YoY U.S. Consumer prices rose 4.1% in June, up from 3.5% in May, for the biggest annual gain since May 1991.
  

• U.S. personal incomes rose 0.1% in June. Adjusting for inflation, spending fell 0.2%.
  

• U.S. factory orders rose 1.7% in June, more than expected.
  

• The USDA said:
  66% of the corn crop is rated good to excellent.
  63% of the soybean crop is rated good to excellent, up from 62% last week.
  56% of the spring wheat crop is rated good to excellent, down from 60% last week.
  86% of the winter wheat crop is harvested.
  47% of the cotton crop is rated good to excellent.
  

Deutsche calls the top of the commodity cycle
Deutsche Bank has called the top of the commodity cycle. The uber-bulls of the oil, food and metals boom have advised clients to take profits before the downturn engulfing most of the global economy works its inevitable effects.

Updates resume August 3 or 4

Quick Overview

• The White House expects the federal budget deficit to hit a new record high of $490 billion in 2008-2009,
  

• Consumer confidence in Germany fell from 3.6 to 2.1 in July, the lowest in five years.
  

• Australia’s index of business confidence expectations for the July to September quarter fell from -4 to -8.
  

Quick Overview

• U.S. new home sales fell 0.6% in June. So far in 2008, new home sales are down 35% YoY.
  
  

• U.S. durable goods orders rose 0.8% in June. Excluding defense, orders rose 0.1%.
  

• Japan's consumer prices rose 0.5% in June and 1.9% YoY.
  

• YoY heavy-duty U.S. retail truck sales rose 9.5% in June. This ends a streak of 17 consecutive months of contraction.
  

Quick Overview

• U.S. existing home sales fell 2.6% on the month.
  

• U.S. jobless claims rose 34,000 last week to 406,000.
  

• U.K. retail sales fell 3.9% in June
  

• Germany's business confidence fell from 101.2 to 97.5 in July
  

• YoY Japan's exports fell 1.7% in June.
  

• YoY the USDA estimates U.S. production of orange juice in 2007- 8 up 24%. They estimate ending stocks at 41%.
  
  
  
  

Quick Overview

• (Reuters) - The United States faced increasing inflationary pressures in recent weeks amid slowing economic growth, the Federal Reserve said on Wednesday, as it described conditions in some areas as "grim," "morose" or "bleak."
  

• Canada’s consumer prices rose 3.1% YoY
  

• Australia's consumer prices rose 4.5%
  

• Industrial orders for the Euro area fell 3.5% in May and down 4.4% YoY.
  

• The U.S. DOE said:
  Supplies of crude oil fell 1.6 million barrels to 295.3 million barrels
  Supplies of gasoline rose 2.9 million barrels
  Supplies of heating oil rose 1.2 million barrels.
  Refinery use fell from 89.5% to 87.1% of capacity last week.
  Gasoline demand fell 2.4% YoY
  Distillate demand rose 3.6%.

Quick Overview

• Richmond Federal Reserve regional index of manufacturing fell from -12 to -16 in July
  

• Canada’s retail sales rose 0.4% in May
  

• The USDA said there were 75.4 million pounds of frozen bellies in storage in June - up 60% YoY. Frozen pork rose 11% YoY.
  

• USDA said there were 1.515 billion pounds of frozen orange juice in inventory - up 67% YoY.
  

• (Reuters) - Wachovia Corp and Washington Mutual Inc led several large U.S. banks in posting weak second-quarter results on Tuesday, hurt by soaring losses from mortgages and other debt.
  
  

On War #267: Running the Narrows
By William S. Lind

More, the money is about to run out. We seem to have forgotten that no activity the state can undertake is more expensive than war. If a tanking economy cuts off the money flow, what comes next? The Sunday, July 12 Cleveland Plain Dealer quotes a local investment advisor saying, “A year ago, I would have discounted the scenario of the next depression. After what I’ve seen this year, I don’t discount anything anymore.” The Fed is trying to head off a full-scale financial panic by turning itself into a pawnshop, but no one knows how long that trick will work. The whole Ponzi scheme that is the current US economy still depends on an inflow of $2 billion in foreign, money daily. What happens if, or when, that flow ceases?

Quick Overview

• U.S. leading indicators fell 0.1% in June
  


• The Chicago Federal Reserve's index of national activity rose from -1.06 to -0.60 in June
  


• The USDA said:
  65% of the corn crop was rated good to excellent, up from 64% a week ago.
  61% of the soybean crop was rated good to excellent, up from 59% a week ago.
  63% of the spring wheat crop was rated good to excellent, up from 61% a week ago.
  45% of the cotton crop was rated good to excellent, down from 46% a week ago.
  71% of the winter wheat crop was harvested.
  


• Dolly may become a hurricane. It is heading toward the Mexico and Texas border.
  


• China’s Ministry of Railways has imposed a 75% full railcar rate increase as of July.
  

Quick Overview

• Canada’s leading indicator reported unchanged for June.
  
• Canada’s wholesale sales rose 1.6% MoM and 2.9% YoY.
  

• The U.K. reported a budget deficit of 24.4 billion pounds for the April to June quarter -- the largest quarterly deficit since 1946.
  

• U.S. cocoa grind totaled 80,415 tons in the second quarter, down 16% YoY.
  

• Argentina “officially “revoked its export tax increase for grain exports.
  

• (AP) Freddie Mac Chairman and Chief Executive Richard Syron pocketed nearly $19.8 million in compensation last year.

Quick Overview

• U.S. housing starts were at an annual rate of 1.066 million units, up 9.1% MoM, but down 26.9% YoY.
  

• U.S. jobless claims rose 18,000 last week to 366,000.
  

• The Philadelphia Federal Reserve's regional manufacturing index improved from -17.1 to -16.3
  

• China's GDP rose 10.1% QoQ.
  

Quick Overview

• U.S. consumer prices rose 1.1% in June and 5.0% YoY, the biggest yearly jump since 1991. Excluding food and energy, prices rose 0.3% in June and 2.4% YoY.
  

• U.S. industrial production rose 0.5% in June.
  

• YoY consumer prices in the Euro area rose 4.0% in June
  

• Canada’s manufacturing sales rose 2.7% in May.
  

• U.K. unemployment rate improved to 5.2% from 5.3% last month
  
  

• The U.S. Department of Energy said:
  Supplies of crude oil rose 3.0 million barrels to 296.9 million barrels
  Supplies of gasoline rose 2.4 million barrels
  Suplies of and heating oil rose 1.3 million barrels.
  Refinery use increased from 89.2% to 89.5% of capacity
  Gasoline demand fell 2.1% YoY
  Distillate demand rose 2.5% YoY.
  
  

Quick Overview

• The SEC said it plans to curb traders' ability to short sell some of the largest banks and brokerage firms.
  

• U.S. producer prices rose 1.8% in June and up 9.2% YoY. Excluding food and energy prices rose 0.2% in June and 3.0% YoY.
  

• U.S. retail sales rose 0.1% in June. Excluding autos, sales rose 0.8%.
  The Federal Reserve of New York's regional index of manufacturing improved from -8.7 to -4.92.
  

• YoY U.K. consumer prices rose 3.8% in June.
  

• Japan reduced its forecast for GDP in 2008-2009 from 1.5% to 1.2%.
  

• YoY China's copper imports fell 19% in June

Recession looms as Spain crumbles
The eurozone is tipping into a deeper downturn than America itself despite the tremors in the US mortgage industry, and may already be in full recession for the first time since the launch of the single currency.

Quick Overview

• China's foreign-exchange reserves rose 35.7% YoY, to a record $1.81 trillion.
  

• Industrial production in the Euro area fell 1.9% in May and down 0.6% YoY
  

• YoY U.K. producer prices rose 10% in June.
  

• The USDA said:
  64% of the corn crop was rated good to excellent, up from 62% a week ago.
  59% of the soybean crop was rated good to excellent, the same as a week ago.
  61% of the spring wheat crop was rated good to excellent, down from 69% a week ago.
  46% of the cotton crop was rated good to excellent, up from 45% a week ago.
  

Paulson Seeks Authority to Shore Up Fannie, Freddie (Update2)
The plan would give Paulson power to buy an unspecified amount of stock in Fannie Mae and Freddie Mac, the official said. He also said he didn't recall any time in the past when the government has taken an equity stake in either company.

Monetarists warn of crunch across Atlantic economies
Paul Kasriel, chief economist at Northern Trust, says lending by US commercial banks contracted at an annual rate of 9.14pc in the 13 weeks to June 18, the most violent reversal since the data series began in 1973. M2 money fell at a rate of 0.37pc.

"The money supply is crumbling in the US. There was a very sharp lending contraction in the second quarter lending. If the Federal Reserve is forced to raise rates now to defend the dollar, it would be checkmate for the US economy," he said.

Quick Overview

• Thanks to the declining dollar, U.S. Trade deficit shrank to $59.8 billion from $60.5.
  

• (Bloomberg) -- Fannie Mae and Freddie Mac, the biggest providers of financing for U.S. home loans, tumbled for a third day as concern escalated that the government may be forced to start a rescue of the companies.
  

• The USDA estimates 2008-2009 U.S. ending stocks of:
  Corn was raised from 673 to 833 million bushels.
  Soybeans were reduced from 175 to 140 million bushels.
  Wheat was raised from 487 to 537 million bushels.
  Sugar was lowered from 1,273,000 to 607,000 tons.
  Cotton was reduced from 5.40 to 5.30 million bales.
  
  

• The USDA estimates 2008-2009 world ending stocks of:
  Corn was raised from 103 to 105 million tons.
  Soybeans were lowered from 50 to 49 million tons.
  Wheat was raised from 132 to 133 million tons.
  Cotton was lowered from 54 to 53 million bales.
  
  

• The USDA lowered its estimate of 2008 beef production from 26.83 to 26.57 billion pounds
  
  

• The USDA raised its estimate of 2008 pork production from 23.37 to 23.47 billion pounds.
  
  

• The USDA raised its estimate of the 2007-2008 Florida orange crop from 169 to 170 million boxes with a record high juice yield of 1.67 gallons per box.
  

Quick Overview

• YoY U.S. foreclosure filings rose 53%.
  

• U.S. jobless claims were down 58,000 last week to 346,000
  

• Australia's unemployment rate improved from 4.3% to 4.2% in June
  

Senate Backs Wiretap Bill to Shield Phone Companies

Obama voted for the plan.