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.

World stability hangs by a thread as economies continue to unravel
The working assumption of the "Great Boom" is – or was – that we live in a benign era where most societies are converging towards some form of market liberalism; where trade and capital flows are unrestricted; where governments have enough legitimacy to keep order by light touch; where a major war is unthinkable.

Quick Overview

• Australia reduced its interest rate from 5.25% to 4.25%,
  

• Producer prices in the Euro area fell 0.8% in October, but rose 6.3% YoY.

• Thailand reduced its interest rate by 1% to 2.75%
  

• November U.S. vehicle sales for:
  Ford fell 31% YoY
  GM fell 41% YoY
  Chrysler fell 47% YoY
  Toyota were down 34% YoY
  Honda were down 32% YoY.

• (Bloomberg) -- Stocks in the U.S. and Europe will withstand a “full-blown” global recession to surge in 2009, UBS AG said.

Quick Overview

• Bernanke said the Fed could directly buy securities and backstop markets as interest rates approach zero.

• The Institute of Supply Management's manufacturing index fell from 38.9 to 36.2 in November.
  

• U.S. construction spending fell 1.2% MoM.
  

• Canada’s GDP rose 0.5% YoY.
  

• Manufacturing in the U.K. fell from 40.7 to a record low of 34.4 in November.
  

• Euro zone manufacturing fell from 41.1 to a record low of 35.6 in November.
  

• OPEC members met but did not announce any production cuts.
  

• The International Cocoa Organization estimated that world consumption exceeded production by 77,000 tons in 2007-2008.

• Retailers got off to a better than expected start for the holiday shopping season, with consumers spending an estimated 7.2% more this year than last.

• Ford may sell Volvo

Citigroup says gold could rise above $2,000 next year as world unravels
This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold.

Quick Overview

• Euro area unemployment rate rose from 7.6% to 7.7% in October, the highest in two years.
  

• YoY Japan’s consumer prices rose 1.7% in October
  Japan’s industrial production fell 3.1%
  Japans’ household spending fell 3.8% in October.
  Japan’s unemployment rate improved from 4.0% to 3.7% in October

• NEW YORK (Reuters) - A man working for Wal-Mart was killed on Friday when a throng of shoppers surged into a Long Island, New York, store and physically broke down the doors, a police spokesman said.

• MOSCOW (Reuters) - Russia's military said on Friday it had intensified efforts to develop new ballistic missiles in response to U.S. plans to deploy an anti-missile system in Europe and Russia's navy test fired a new generation rocket.

Possible Geopolitical Consequences of the Mumbai Attacks (Stratfor)
It is not clear the degree to which the Pakistani government can control the situation. But the Indians will have no choice but to be assertive, and the United States will move along the same line. Whether it is the current government in India that reacts, or one that succeeds doesn’t matter. Either way, India is under enormous pressure to respond. Therefore the events point to a serious crisis not simply between Pakistan and India, but within Pakistan as well, with the government caught between foreign powers and domestic realities. Given the circumstances, massive destabilization is possible — never a good thing with a nuclear power.

Quick Overview

• U.S. orders for durable goods fell 6.2% in October, weaker than expected. Excluding transportation, orders fell 4.4%.
  

• U.S. New home sales fell 5.3% MoM. YoY new home sales are down 37%.
  

• The University of Michigan's consumer sentiment index fell from 57.6 to 55.3.
  

• U.S. personal incomes rose 0.3% in October
  

• U.S. Consumer spending fell 1.0%.
  

• The Chicago index of purchasing managers fell from 37.8 to 33.8 in November.
  

• The European Union is plotting a 200 billion euro stimulus plan.
  

• Australia's construction activity rose 4.4% in September
  

• China cut its interest rate from 6.66% to 5.58%,
  

• Ports in China registered a 6% per YoY volume growth in October.
  

• The World Bank expects China's economy to expand 7.5% in 2009 - down from its earlier forecast of 9.2%
  

• The U.S. Department of Energy said:
  Supplies of crude oil rose 7.3 million barrels to 320.8 million barrels.
  Supplies of gasoline rose 1.9 million barrels
  Supplies of heating oil fell 400,000 barrels.
  Refinery use rose from 84.9% to 86.2% of capacity last week.
  Gasoline demand fell 2.8% YoY
  Distillate demand fell 2.2% YoY.
  

Is Britain going bankrupt?
Today they reached 86 basis points, near Portuguese debt in the league table. For good reason. Alistair Darling has had to admit that the British economy faces the most sudden economic collapse since World War Two, and the worst budget deficit of any major country in the world.
Ok, this is a lot lower than Iceland, Ukraine, Hungary, and other clients of the IMF, but is significantly higher than Germany (35), USA (43), and France (49).

Quick Overview

• Helicopter Ben is working hard. The Fed threw a massive $800 billion life-line to consumers with two new programs aimed at making it easier for them to obtain loans for homes, cars and on credit cards.
  

• U.S. GDP shrunk at an annual rate of -0.5% in the third quarter, down from the previous estimate of -0.3%.
  

• The U.S. GDP price index rose 2.7%.
  

• YoY U.S. Corporate profits fell 9.0%.
  

• The Conference Board's consumer confidence index rose from 38.8 to 44.9 in November,
  

• YoY S&P/Case-Shiller national index fell 17% in September.
  

• The World Bank predicted real GDP in China will be up 7.5% in 2009,
  

• Canada’s retail sales rose 1.1% in September.
  

• BHP Billiton scrapped its hostile bid for Rio Tinto because of slumping commodity prices.

Quick Overview

• The U.S. Government agreed to stabilize Citigroup by guaranteeing $306 billion in troublesome assets. It also gave Citi $20 billion in exchange for preferred stock.
  

• The National Association of Realtors said Home resale’s fell to a 4.98 million annual rate, a 3.1% decrease from September's revised figure.
  The median-sales price declined to $183,300.

• Industrial new orders in the Euro area fell 3.9% in September. YoY orders fell 1.1%.
  

• YoY GDP in Chile rose 4.1%
  

• Consumer confidence in Canada dropped further in November to a fresh 26-year low, the Conference Board of Canada said.
  

• Hungarian central bank cut its base rate by 50 bps to 11%
  

• The USDA said there were 10.97 million head of cattle on feed as of November 1st, down 6.8% YoY.
  

• The USDA said frozen pork supplies at the end of October were up 4% YoY
  

• The terminal operator of China's Cosco Group, said throughput increased 14.1 % in October, but fell 8.5 % at its Cosco-HIT facility in Hong Kong.

• In the latest issue of The New Yorker magazine, Bernanke has recognized he was wrong to believe there would be limited fallout to financial markets from the US housing market's collapse.

Recession’s Grip Forces U.S. to Flood World With More Dollars
Investors, shell-shocked by the turmoil, are piling into super-safe Treasury securities, even as the U.S. government ships more supply out the door. Three-month bill rates dropped last week to 0.01 percent, the lowest since at least January 1940, and yields on Treasuries maturing in two through 30 years all fell to the least since the government began regular sales of the securities.

Geithner could slow bank-stock assault
But even analysts who have long been skeptical of Citi says its recent trading price understates the firm's true worth. "We believe that there is fundamental value at Citigroup that justifies a $9 price target," Deutsche Bank analyst Mike Mayo wrote Friday

Quick Overview

• Asian markets defied the big U.S. slump overnight and ended higher. Japan's Nikkei rose 2.7%, South Korea's Kospi rose 5.8%.
  

• Japan kept the interest rate at 0.30%
  Japan's Finance Minister said he may consider intervention to bring the yen down from "undesirable" levels.
  
  

• Manufacturing and services index in the Euro area dropped from 43.6 to 39.7
  

• YoY Canada’s consumer prices rose 2.6%
  

• Consumer spending in France fell 0.4% in October.
  

• The World Gold Council said world gold demand was 1,133 tons in the third quarter of 2008, up 18% YoY.
  

• The International Copper Study Group said that world copper production exceeded use by 125,000 tons in August.
  

Markets wary of Irish debt as fresh rescue looms
This is a disturbing pattern across Europe as the global credit crisis drags on, with extreme cases in Iceland, Ukraine, Russia, Hungary and Latvia. There are fears that investors could start to shun sovereign debt in Western states where banks have outgrown the underlying economy.

Quick Overview

• Citigroup began weighing the possibility of auctioning off pieces of the company or even selling itself outright. Shares fell a further 26%.

• U.S. Jobless claims rose 27,000 last week to 542,000, the most in 16 years. The Senate is voting today on extending unemployment benefits by at least seven weeks. Bush is for it.
  

• The Philadelphia Feds regional index of manufacturing dropped from -37.5 to -39.3 in November,
  

• The Conference Board's index of leading indicators fell 0.8% in October.
  

• U.K. retail sales fell 0.1% in October.
  

• Canada’s wholesale trade rose 1.5% in September
  

• Switzerland lowered interest rates from 2.0% to 1.0%.
  

• Fifteen CEOs of large home-building and financial-services firms each earned more than $100 million during the past five years.
  
  

Bank fears over home loan aid Under the plans, which could be a model for other efforts, homeowners are eligible for help if they are behind on payments for 90 days and pay more than 38 per cent of their income on mortgage payments.

Quick Overview

• U.S. consumer price index fell 1.0% in October but rose 3.7% YoY
  

• U.S. housing starts were at an annual rate of 791,000 in October, down 4.5% MoM, and down 31% YoY.
  

• Canada’s index of leading indicators fell 0.4% in October
  

• Construction output in the Euro area fell 1.3% in September.
  

• The U.S. Department of Energy said:
  Supplies of crude oil rose 1.6 million barrels last week to 313.5 million barrels.
  Supplies of gasoline rose 500,000 barrels
  Supplies of heating oil supplies were up 400,000 barrels
  Refinery use rose from 84.6% to 84.9%
  Gasoline demand fell 2.2% YoY.
  Distillate demand fell 3.3% YoY.
  

• The USDA said that world ending stocks of sugar will be 24% in 2008-2009
  
  

Quick Overview

• U.S. producer price index fell 2.8% in October, the biggest monthly decline on record.
  

• U.K. consumer prices rose 4.5% in October.
  

• Asia's two largest economies offered financial aid to needy nations: Japan promised $100 billion in loans to the IMF; China offered Pakistan a $500 million aid package.
  

• YoY the median price of a U.S. home fell 9%, the Chicago- based National Association of Realtors said today.

When It's a Clear Day and You Can't See GM
Generally, when countries acquire more debt than they can service, they inflate away the debt. If foreign creditors do not save the Obama administration, the Treasury will print bonds and give them to the Federal Reserve, which will issue money.

Japan's `Least Ugly' Economy May Beat U.S., Europe in Crisis
Even after a 10 percent drop in wages since 1997, Japan's households still managed to save about 3 percent of their incomes last year, according to OECD figures. In the U.S., where falling sales sent electronics-retailer Circuit City Stores Inc. into bankruptcy this month, the savings rate is 0.4 percent.

Quick Overview

• U.S. industrial production rose 1.3% in October, up from a revised 3.7% decline in September.
  

• The New York Feds regional index of manufacturing fell from -24.6 to -25.4
  

• Japan’s GDP fell 0.1% in the third quarter.
  

• (Reuters) - Japan became the latest major economy to fall into recession on Monday and Citigroup said it would cut 52,000 jobs, one of the largest layoffs in history.
  

• Australia's retail sales fell 0.1% in the third quarter
  

• OPEC's Monthly Oil Report said they expect world oil demand to average 86.2 million barrels per day in 2008 and 86.7 in 2009.
  

• Hong Kong Marine Department said the port handled 2.001 million TEU in October, down 2.9% YoY.
  YoY Singapore's Maritime and Port Authority reported a 4.9% increase in October.

G-20 Calls for Action on Growth, Regulatory Changes (Update2)
The leaders endorsed the use of clearinghouses for financial derivatives to back trades and absorb losses in case of a dealer failure. The first central clearinghouse for the $33 trillion credit-default swap market should be in operation by year-end in the U.S., under an agreement signed yesterday by three U.S. financial regulators.

Quick Overview

• U.S retail sales fell 2.8% in October --the largest monthly drop on record. Excluding autos, sales fell 2.2%.
  

• The University of Michigan's consumer sentiment index rose from 57.6 to 57.9, stronger than expected.
  

• GDP in the Euro area fell 0.2% in the third quarter of 2008, but rose 0.7% YoY
  YoY Consumer prices in the Euro area rose 3.2% in October.
  

• Canada manufacturing sales rose 0.1% in September.
  
• China posted its first decline in monthly electricity output in four years
  

• Russia's central bank increases its key interest rate to 12% from 11% in an attempt to reduce an outflow of capital.
  

• Bernanke said central bankers around the world were ready to do more to ease severe credit market strains and support faltering economic growth.
  

Quick Overview

• U.S. jobless claims rose 32,000 to 516,000, the most in seven years.
  

• U.S. Exports fell from $165.3 to $155.4 billion in September while imports fell from $224.4 to $211.9 billion – resulting in $56.5 billion of net imports.
  

• Canada’s exports fell 1.0% to C$42.5 billion in September while imports rose 1.9% to C$38.0 billion
  

• The U.S. Department of Energy said:
  Supplies of crude oil are unchanged at 311.9 million barrels.
  Supplies of gasoline rose 2.0 million barrels
  Supplies of heating oil rose 1.3 million barrels.
  Refinery use fell from 85.3% to 84.6%
  YoY gasoline demand fell 1.9%
  YoY distillate demand fell 4.6%
  

• The International Energy Agency lowered its forecast of 2009 world oil demand by 670,000 barrels per day to 86.5 million barrels per day.

• Recession confirmed in Germany Q3 GDP contracts by -0.5% after -0.4% in Q2

Abandon all hope once you enter deflation
The curse of deflation is that it increases the burden of debts. Incomes fall: debts stay the same. This way lies suffocation. It was bad enough in the early 1930s when US farmers faced a Sisyphean Task trying to meet mortgage payments on their land as crop prices kept sliding. They suffered mass foreclosure and fled West, as recounted in John Steinbeck's Grapes of Wrath.

Quick Overview

• The U.K.'s unemployment rate rose to 5.8%, up from 5.7% MoM.
  
  
• Industrial production in the Euro area fell 1.6% in September.
  
  

• (Reuters) - Home values in the United States posted their seventh consecutive quarterly decline, with nearly one-third of Americans who sold in the past year losing money, real estate website Zillow.com said on Wednesday.
  

• (Bloomberg) -- U.S. Treasury Secretary Henry Paulson plans to use the second half of the $700 billion financial rescue program to help relieve pressures on consumer credit, scrapping an effort to buy devalued mortgage assets.

Quick Overview

• Economic sentiment in Germany increased from a record low -63.0 to -53.5

Quick Overview

• China approved stimulus plan worth nearly $600 billion through 2010 to boost domestic demand.
  

• Japan's machinery orders rose 5.5% in September.
  

• U.K.'s producer prices fell 1.0% in October
  

• Canada's new home starts fell 3% MoM.
  

• The USDA's 2008-2009 U.S. ending stocks estimate for:
  Corn was increased from 1.088 to 1.124 billion bushels.
  Soybeans unchanged at 205 million bushels.
  Wheat was increased from 601 to 603 million bushels.
  Sugar was increased from 656,000 to 907,000 tons.
  Cotton unchanged at 6.20 million bales.
  

• The USDA's 2008-2009 world ending stocks estimate for:
  Corn was increased from 106 to 110 million tons.
  Soybeans were reduced, from 54.3 to 54.1 million tons.
  Wheat was increased from 144 to 145 million tons.
  Cotton was increased from 55 to 57 million tons.
  

• The USDA estimates Brazil’s and Argentina's soybean production up 3%, down from last month's estimate of up 5%.
  

Bottom months away: Greenspan
It was only when global demand for U.S. mortgage-backed instruments began to boom in 2005 did the quality of mortgage products begin to deteriorate, he said.
“We hadn't the slightest inclination at the time that the securitization problems would become so large,” he said.

Barack Obama will bring step-change to US economic policy Mr Obama inherits an almighty mess. It is the result of pushing US domestic debt from 130pc of GDP to over 220pc in a half a century of rising leverage. This game has run its course. There will be a slow, painful purge over coming years.

Quick Overview

• U.S. unemployment rate rose from 6.1% to 6.5% in October -- the highest rate in 14 years. Non-farm payrolls declined 240,000. The Labor Department also revised September's numbers from minus 159,000 to minus 284,000.
  

• Canada’s unemployment rate rose from 6.1% to 6.2%.

• U.S. wholesale sales were down 1.5% in September ,inventories were fell 0.1%.
  

• The National Association of Realtors said U.S. pending home sales fell 4.6%
  

• Korea reduced its interest rate from 4.25% to 4.00%.
  

• General Motors used $6.9 billion in cash in Q3 and may fall below the minimum it needs to operate before the end of this year.
  

• Ford burns $7.7 billion in the quarter.
  

Quick Overview

• U.S. Non-farm productivity rose an annual rate of 1.1% in the third quarter, down from plus 3.6% in the second quarter.
  

• (AP) The Labor Department reported Thursday the number of people continuing to draw unemployment benefits jumped by 122,000 to 3.84 million in late October. It was the highest level since late February 1983..
  

• The BoE lowered rates from 4.50% to 3.00%.
  

• The European Central Bank cut its rate from 3.75% to 3.25%
  

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

• Canada’s building permitsrose 13.4%.
  

• Inflation in India rose to 10.72 %
  

• The USDA said that, as of last week, 2008-2009 exports of:
  Corn fell from down 30% to down 34% YoY.
  Soybeans improved from down 18% to down 3% YoY.
  Wheat fell from down 11% to down 13% YoY.
  Cotton improved from down 10% to down 9% YoY.
  

• Brazil's Ag Ministry dropped their projection for their 2008/09 (Oct/Sept) soybean crop to 58.4-59.3 million tonness from October's forecast of 60.10-61.27 million tonnes.
  

• F.O. Licht lowered their projection for Argentina's 2008/09 wheat crop to 11.5 mmt from 15.4. This compares with their September forecast of 13.0 mmt.
  

• F.O. Licht raised their estimate of Russia’s wheat crop to 62.5 million tonnes from 56.0 mmt forecast previously and 49.2 million harvested last year.
  Ukraine's harvest is estimated at 24.5 million tonnes up from last year's 13.7 million tonnes.

America's companies reconquer the world
The oil group Exxon Mobil is once again the global leader with a market value of $390bn. PetroChina briefly had a theoretical paper value of over $1,000bn at the height of the Shanghai bubble but has since crashed to $299bn.
Wal-Mart ($222bn), Microsoft ($207bn). and General Electric ($206) have moved briskly up the ladder, claiming the third, fourth, and fifth slots, with Procter & Gamble, Johnson & Johnson, and Warren Buffett's Berkshire Hathaway close behind.

Quick Overview

• Barack Obama has been elected the 44th President of the United States. Good Luck, Barack!
  

• The Institute of Supply Managements' index of services fell from 50.2 to 44.4 -- a record low.
  

• Retail sales volume in the Euro area fell 0.2% MoM and down 1.6% YoY.
  

• U.K.'s factory output fell 0.8% in September.
  

• An index of services in the U.K. fell from 46.0 to 42.4 in October.
  

• An index of services in the Euro zone fell from 48.4 to 45.6 in October.
  
  

• The U.S. Department of Energy said:
  Supplies of crude oil unchanged last week at 311.9 million barrels.
  Supplies of gasoline rose 1.1 million barrels.
  Supplies of heating oil rose 1.7 million barrels.
  Refinery use remained at 85.3% .
  Gasoline demand fell 2.3% YoY.
  Distillate demand fell 4.8% YoY.
  

• The Florida Department of Citrus said there were 100.19 million gallons of frozen orange juice concentrate in inventory in October, up 104% YoY.
  

• Australia reduced its estimated wheat crop from 22.5 to 19.9 million tons.
  

Quick Overview

• U.S. factory orders fell 2.5% in September, weaker than expected.
  

• YoY producer prices in the Euro area rose 7.9% in September.
  

• China’s Manufacturers Purchasing Managers Index (PMI) showed that factory activity fell to 45.2 from 47.7. (50 and below indicates contraction)
  

• Spain’s unemployment rate reached a 12-year high of 11.3%, the worst in the EU.
  

• The USDA said 55% of the corn crop was harvested, down from the five-year average of 79%.
  86% of the soybean crop was harvested, at its regular pace.

• The cost of production for Brazilian soybeans, produced in Mato Grosso, is estimates in a range of $8.27 to 9.19 with transportation costs adding $2.50-3.25 per bushel. This means farmers will need to see a board price north of $11.00 per bushel in the May 09 forward futures in order to lock in a positive return.
  

Recession hits Europe as Club Med debt worries grow
The Spanish government said yesterday it would step in directly to pay half the mortgage costs for those who lose their jobs in order to pre-empt a self-feeding spiral of defaults. The package covers mortgages up to €170,000 for the next two years.

Quick Overview

• The Institute of Supply Managements' index of manufacturing fell from 43.5 to 38.9 in October -- the lowest in 26 years.
  

• U.S. construction spending was at an annual rate of $1.0601 trillion in September, down 0.3% MoM
  

• Euro zone manufacturing fell from 45.0 to 41.1 in October.
  

• U.K. Manufacturing increased from 41.2 to 41.5 in October
  

• Australia's retail sales fell 1.1% in October.
• Australia cuts key interest rate by 0.75 %
  

• The largest ethanol producer in the U.S., Verasun, filed for Chapter 11 bankruptcy.
  

• Ford Motor reported a 30% drop in U.S. vehicle sales for October, while Toyota's fell 23%. Car companies from Japan to Italy to Detroit said October sales were the weakest in about 20 years.
  

• World container trade is expected to grow 4.5% in 2008 compared to 9.5% in 2007, said a Global Insight Report. In 2009, US container imports are projected to grow marginally at a rate of 1.6 per cent.

Deflation Now…Inflation Later
Our Trade of the Decade was meant to capture the early stages of this - but only a bit of it: the relationship between gold and stock prices. In 1982, briefly, you could have bought every one of the stocks in the Dow index for a single ounce of gold. But by the time the stock market finished its epic rise, in January 2000, (while gold was doing an epic fall!) you would have needed 44 ounces of gold to buy the Dow. Now, that ratio has come down considerably. You only need about 13 ounces of gold to buy the Dow. And as stocks come down, the ratio is likely to fall below 5…and eventually back to 1 to 1 (at which time, remember, it will be time to sell gold and buy shares).