No update today

Quick Overview

• Bank of China lifts deposit rates a quarter of a percentage point.

• (Bloomberg) Silver exports from China, the world’s largest, may drop about 40 percent this year as domestic demand from industry and investors climbs, according to Beijing Antaike Information Development Co.

• U.S. housing starts rose by 0.3% in September

• (Bloomberg) Commodities will rally if the U.S. Federal Reserve eases monetary policy next month, according to UBS AG, which describes a likely second round of quantitative easing as a “game changer” for copper, gold and palladium

• Treasury Secretary Timothy Geithner vowed on Monday that the United States would not devalue the dollar for export advantage. (No kidding)

• Basel III is “strengthening” bank capital requirements, by increasing the minimum common equity requirement to a total of 7% from the current 2.5%. (WOW)

• (Bloomberg)Wall Street bailout returns 8.2% profit beating treasury bonds
  
  

Quick Overview

• Brazil's sugar output for the 2010-2011 crop season is expected to reach 40.5 million metric tons, said F.O. Licht on Monday.

• The Philippines may lose 600,000 metric tons of its rice crops because of Typhoon Megi

• Rice production in Australia may quadruple next harvest as heavier-than-usual rainfall boosts water supplies following a decade of drought.

• (Bloomberg) -- Confidence among U.S. homebuilders rose in October to the highest level in four months, a sign residential construction is stabilizing at depressed levels.

• The cost of living in New Zealand rose 1.1% in Q3

• Grain-hauling ships have been blocked since Oct. 16 at ports in Ukraine, the world’s largest exporter of barley.

• Citigroup, the US bank part-owned by the American taxpayer, posted better-than-expected third-quarter net profits of $2.2bn.

• China must make a "major breakthrough" to restructure and rebalance its economy, the Communist party said in a five-year plan.

• (Spiegel) The world is gathered in Japan this week in an effort to put an end to the extinction of plant and animal species across the globe. But while everyone agrees that biodiversity is important, the conference may fail anyway -- partially because the Americans don't seem interested.Industrial

• Industrial Production in the U.S.  fell 0.2 %

Quick Overview

• Elwyn Taylor on Twitter: Omen? La Niña development to date is most like 1973, the next year (1974) was not good for US corn.

• Typhoon Megi gathered strength as it barreled towards the northern Philippines on Monday, with authorities evacuating thousands of villagers to safer ground hours before it was to hit land. State weather forecasters said Megi has developed into a super typhoon and was expected to slam into the extreme northern Philippines by Monday and then cut westwards towards the South China Sea.

• (WSJ) Zambian locals rioted and blocked a road leading to Chinese-owned Collum Coal Mine Ltd. on Saturday to protest the shooting of at least 11 miners, allegedly by Chinese supervisors during a protest over low wages, police officials said Sunday.

• (Bloomberg) -- The Bank of England will increase its emergency bond-purchase plan by 100 billion pounds ($160 billion) to aid the economy as the government cuts spending, the Centre for Economics and Business Research said.

• (Bloomberg) -- China’s medium and heavy rare earths reserves may last 15 years to 20 years at the current rate of production

• (FT) Charles Evans, president of the Chicago Fed, said that “in my opinion, much more policy accommodation is appropriate today” because “the US economy is best described as being in a bona fide liquidity trap”, a point where ultra-low interest rates and high savings rates conspire to make monetary policy ineffective.

The Subprime Debacle: Act 2" But once mortgage loan securitization happened, things got sloppy...they got sloppy by the very nature of mortgage-backed securities.
"The whole purpose of MBSs was for different investors to have their different risk appetites satiated with different bonds. Some bond customers wanted super-safe bonds with low returns, some others wanted riskier bonds with correspondingly higher rates of return.
"Therefore, as everyone knows, the loans were 'bundled' into REMICs (Real-Estate Mortgage Investment Conduits, a special vehicle designed to hold the loans for tax purposes), and then "sliced & diced"...split up and put into tranches, according to their likelihood of default, their interest rates, and other characteristics.
"This slicing and dicing created 'senior tranches,' where the loans would likely be paid in full, if the past history of mortgage loan statistics was to be believed. And it also created 'junior tranches,' where the loans might well default, again according to past history and statistics. (A whole range of tranches was created, of course, but for the purposes of this discussion we can ignore all those countless other variations.)
"These various tranches were sold to different investors, according to their risk appetite. That's why some of the MBS bonds were rated as safe as Treasury bonds, and others were rated by the ratings agencies as risky as junk bonds.
"But here's the key issue: When an MBS was first created, all the mortgages were pristine...none had defaulted yet, because they were all brand-new loans. Statistically, some would default and some others would be paid back in full...but which ones specifically would default? No one knew, of course. If I toss a coin 1,000 times, statistically, 500 tosses the coin will land heads...but what will the result be of, say, the 723rd toss? No one knows.

Quick Overview

• The Fed’s Bernanke is a step closer to adopting a formal inflation target saying that most of the body’s officials think that price rises should be “2 % or a bit below”.

• U.S. Consumer sentiment index fell to 67.9

• Czech PPI rose to 2.4% YoY

• The U.S. federal government spent $1.294 trillion more than it collected in the fiscal year that ended Sept. 30. The deficit amounted to 8.9% of GDP. That's down from fiscal 2009, when the deficit of $1.416 trillion was 10.0% of GDP.

• Annual inflation in the Eurozone rose to 1.8% in September

• U.S. retail sales rose a stronger-than-expected 0.6% in September, lifted by big-ticket items including autos, electronics and appliances

Currency wars are necessary if all else failsThe atomic bomb, of course, is quantitative easing by the Federal Reserve. America has in effect issued an ultimatum to China and G20: either you stop this predatory behaviour and agree to some formula for global rebalancing, or we will deploy QE2 `a l’outrance’ to flood your economies with excess liquidity. We will cause you to overheat and drive up your wage costs. We will impose a de facto currency revaluation by more brutal and disruptive means, and there is little you can do to stop it. Pick your poison.

Quick Overview

• The number of people who signed up for unemployment benefits rose 13,000 to 462,000

• Spain’s September CPI rose 2.1% YoY

• Bad weather has sharply reduced the South Korean cabbage crop, with some Koreans paying $10-$14/head.

• U.S. wholesale prices rose 0.4% in September.

• The U.S. trade deficit widened by 8.8% in August to $46.3 billion

• Tin is the best performer on the LME this year – so far.

• YoY Japan's wholesale prices dipped 0.1 % in September.

• Agriculture Secretary Tom Vilsack today announced that during this month, USDA will distribute approximately $1.6 billion in annual CRP rental payments and $3.8 billion in final 2010 direct payments to America's farmers and ranchers.

• (Bloomberg) -- CME Group Inc., the world’s largest futures exchange, plans to begin clearing interest-rate swaps next week

• The U.S. DOE said:
  
  Supplies of crude oil fell by 0.4 million barrels in the week ending October 8,
  
  Supplies of gasoline fell by 1.8 million barrels.
  
  Supplies of distillates fell by 0.3 million barrels
  
  

The Values of Everything The acceptance of policies which counteract our interests is the pervasive mystery of the 21st Century. In the United States, blue-collar workers angrily demand that they be left without healthcare, and insist that millionaires should pay less tax. In the UK we appear ready to abandon the social progress for which our ancestors risked their lives with barely a mutter of protest. What has happened to us?

Quick Overview

• China posted a $16.9 billion trade surplus for September. Exports rose 25.1% YoY and imports climbed 24.1%.

• Japanese machinery orders rose 10.1% in August.

• The Environmental Protection Agency may allow ethanol levels in gasoline blends to be as high as 15%, up from the current 10%
• EPA's approval of an increase of ethanol levels in gasoline for model-year 2007 cars and newer fails to extend rally. The increase was expected..

• China imported 40.16 million metric tons of soybeans in the first nine months of the year, up 24.1% on year.
• China imported 460 million tons of iron ore, down 2.5% on year.
• China imported 23.29 million tons of crude in September 35.4% higher than the 17.2 million tons China imported in the corresponding month of 2009.

• Analysts expect Copper demand to outstrip next year’s supply by more than 400,000 tonnes.

• A La Nina event, which has brought wet weather to Australia and drought to Brazil, has strengthened, according to Australia’s Bureau of Meteorology.The La Niña in the Pacific remains a moderate to strong event. The Southern Oscillation Index (SOI) value of +25 for September was its highest monthly value since 1973.
  
  
• U.K. consumer confidence fell to an 18-month low of 53
• Intel said fourth-quarter sales may total  $11.8 billion, compared with estimates of $11.3 billion

• The USDA thinks that Sugar shipments from Thailand, the second-largest exporter, will decline 20 % next year to 4.7 million metric tons.

• The USDA thinks that Brazil, the world’s largest producer, will see a sugar harvest 3.2% lower next year.

• According to  Reuters, Brazil is preparing to auction off big chunks of the Amazon rainforest to timber companies. By year-end 2.47 millions  acres of forests will go under private management, with 27 million acres privately controlled within five years--that's an area the size of Virginia.

Quick Overview

• (Bloomberg) -- As many as 9 million U.S. mortgages in the foreclosure pipeline or already through the process may face legal challenges because of questions about the validity of documents, according to Morgan Stanley.

• Minutes from the latest Fed meeting kept hopes alive that the central bank would take more action to stimulate the economy.

• Sweden's expects GDP to expand 4.8% in 2010.

• (Bloomberg) -- The rice harvest in the U.S., the world’s fourth-largest exporter last year, may be at least 10 percent smaller than estimated.

• YoY German inflation rose 1.3% in September.

• Indian industrial production registered 5.6 % growth in August much lower than the 10% expected

• Only 41% of Austrians considered saving money as "very important," which decreased by 8% YoY.

• Chicago corn, soybeans, rice etc. resumed to rally on concerns that production this year may fail to meet demand.

Quick Overview

• Barclay’s sees CBOT December corn above $6 per bushel.

• Indonesia is seeking 700,000 metric tons of rice from Vietnam to replenish domestic inventories

• Importers in Bangladesh have bought around 55,000 metric tons white rice from Myanmar at an average price of $375/ton. The absence of India from the export market has forced buyers in Bangladesh to turn to Vietnam and Myanmar.

• Pakistan's exports of rice will likely fall 35% to 3 million metric tons this fiscal year.

• Standard Bank will be dealer and market maker for a new gold ETF to be launched in Hong Kong in October. The Value Gold ETF, to be listed on the Hong Kong stock exchange, will be the first in Asia where the underlying gold will be physically held in Hong Kong rather than in London or Zurich.

• Italy August industrial output rose 1.6% MoM and 9.5% YoY

• Sugar is supported by reports of Brazilian industry buy-backs of sugar from the trade due to a domestic price rally; congestion at Brazilian ports, and a rally in U.S. corn futures, dealers said.

(FT) Speculators at fault for food prices, says pollThe poll shows the French to be most critical of speculators, with 49 per cent of respondents saying they are the main factor behind rising food prices. Similar sentiments were shown in Spain and Germany, where 36 and 35 per cent respectively blamed speculators. In Italy, 28 per cent pointed to government policy, followed by speculators, with 25 per cent. Only 11 and 9 per cent of people in the US and UK respectively fault speculators

(FT) Soaring prices threaten new food crisis
“The combined shortfalls [in the US, Europe, Russia and Ukraine] present a much tighter supply picture than just a few months ago,” the USDA said.

Quick Overview

• The U.S. posted a $1.29 trillion budget deficit for the fiscal year that ended September 30

• The USDA pegged corn production at 12.664 billion bushels, down from 13.160 billion last months and 147 million bushels below trade estimates. Corn yields were pegged at 155.8 bpa. Corn ending stocks fell to 902 million bu, down from 1.708 million last year .These numbers s represent 57.8 days of supply -- the second tightest in the past 35 years.
• The USDA pegged wheat stocks at 853 million bushels down from 902 million last month
• The USAD pegged the soybean crop at 3.408 billion bushels and a yield of 44.4bpa. That's down from 3.483 billion and 44.7bpa last month. Ending stocks are now at 265 million down from 350 million last month.

• The U.S. economy lost 95,000 nonfarm jobs in September.

• The Fed faces a difficult decision at next month's policy meeting on whether to offer further stimulus to a U.S. economy that is still growing but only slowly, St. Louis Fed President James Bullard said.

• Ukraine will limit grain exports for the rest of this year, but needs a few days to clarify.

• Indonesia, the world’s third-largest rice producer, may have to import 300,000 metric tons of the grain, the first bulk purchase since 2007, to meet an expected shortfall in government supplies, Bulog executives said.

• (Bloomberg) Las Vegas Strip gambling revenue jumped 21% in August, showing the biggest U.S. casino city is emerging from a record slump.

• Brazil will harvest 3.2% less sugar cane than previously estimated in the year that began May 1, the U.S. Department of Agriculture said.

Quick Overview

• U.S. Jobless claims fell by 11,000 to 445,000 in the week ended Oct. 2, the fewest since July 10.

• Bank of England holds rates at 0.5%.

• The ECB has left its interest rate unchanged at the record low of 1%

• NOAA: Strong La Nina seen in Nov-Jan to stay into 2Q of 2011

• U.S. same-store sales rose 2.8 %

• The French trade deficit widened to 4.93 billion euros (6.88 billion U.S. dollars) in August 2010 on imports growth from 4.42 billion euros (6.18 billion dollars) a month earlier.

Quick Overview

• U.S. employment fell by 39,000 after a revised gain of 10,000 in August. Even if U.S. economy manages to grow, it will be too slow to provide enough jobs needed and high unemployment rate will be a new normal for Americans, said Nobel laureate Joseph Stiglitz on Wednesday.

• MoM Germany's factory orders rose 3.4% in August

• Euro-zone GDP grew 1% in Q2.

• GE agreed to buy oil-field equipment maker Dresser Inc. for $3 billion.

• South Korea and the European Union sealed a bilateral free trade agreement

• The IMF upwardly revised its projection of world output growth to 4.8% this year mainly because of faster growth driven by emerging and developing economies, but warned that downside risks remain elevated.

• YoY sales of new imported vehicles in Japan, including Japanese brands manufactured abroad, jumped 34.7% in the April-September period.

• The Singapore PMI remained on contraction mode with a reading of 49.5 last month, though it did rise a mere 0.1 point over August, local daily The Straits Times reported.

• The U.S. DOE said:
  
  Crude oil stocks rose 3.1 million barrels
  
  Gasoline stocks fell by 2.6 million barrels
  
  Distillate stocks fell by 1.1 million
  
  
• Australia created a net 49,500 new jobs in September, more than twice the market forecast. The unemployment rate held steady at 5.1 percent.
  
  

The Aliens Are Coming Consider, for example, the walking catfish, which is now colonising China, Thailand and the United States, after escaping from fish farms and ornamental ponds(6). It can move across land at night, reaching water that no other fish species has colonised. It slips into fish farms and quietly works through the stock. It can burrow into the mud when times are hard and lie without food for months, before exploding back into the ecosystem when conditions improve. It eats almost anything that moves.

..But in many parts of the world the policy appears to consist of staring dumbly at the problem while something can be done, then panicking when it’s too late.

Quick Overview

• Japan announced it will buy more bonds and cut its key overnight call rate to a range of 0.0%-0.1%

• Australia held steady on interest rates, bucking expectations by most economists that it would boost rates.

• The Institute of Supply Management’s non-manufacturing index rose to 53.8 per cent from 51.5 per cent in August.

• Silver continues to outperform gold, with the number of ounces of silver needed to buy an ounce of gold slipping to a one-year low at 59.15.

• The US Grains Council estimates China's corn production at 6.22 billion bushels, down 320 million from USDA's estimate and down 280 million from China's estimate.

Quick Overview

• U.S. factory orders fell by 0.5% in August

• National Association of Realtors said its pending U.S. home sales index rose to 82.3 from 78.9 in July.

• YoY September consumer confidence in Mexico rose to 91.6 from 81.9

• Latvia's industrial output rose 20.5% YoY in September -- a nine-year high.

• WoW US coal use fell 4%, but rose 2% YoY

• Iraq's oil minister boosted the estimate of the country's proven oil reserves to 143.1 billion barrels-- up 25 %

• YoY Russia’s annual inflation rate rose 7% after the country’s worst drought in at least half a century hobbled agricultural output.

• Global steel demand growth will decelerate next year as China’s real estate market weakens and consumption in Japan falls, the World Steel Association said.

• YoY the monetary base in Japan rose 5.8% in September

• The head of the IMF Dominique Strauss-Kahn urged major economies to do more to prevent a global currency war.

• The Purchasing Managers Index (PMI) of China's manufacturing sector rose to 53.8 % in September, up 2.1% from August

• Despite investment plans to upgrade air cargo terminals at Nagpur, Mumbai and Delhi, lack of aircraft capacity in India and Bangladesh is threatening to roadblock demand expected to grow annually at 10% in the next five years according to the Airports Authority of India.

• Dominic Dyer, chief executive of the Crop Protection Association, said "The U.K. is now only 58.9% self-sufficient food - the lowest figure for 42 years" .

• UPS Freight, the less-than-truckload unit of UPS, said it will institute an average 5.9% general rate increase later this month.

• Robert Edwards, the father of in vitro fertilisation, has received this year's Nobel prize.The

• Economist online: Our voters think that Barack Obama's time in the White House so far has been good for business.

• Arlan Suderman: Rumors that Russia is in to buy US corn following flat price break. Would be massively supportive if true..

• Environmental campaigner and Green party activists Marina Silva, who was raised in the Amazon state of Acre and was illiterate until the age of 16, failed to make the second round but came away with 19% of the Brazilian vote, far higher than pollsters had expected.
  

Quick Overview

• U.S. claims for unemployment benefits fell by 16,000 in the week ending September 25 to 453,000.

• Soybean inventories on Sept. 1 totaled 151 million bushels, up from 150 million estimated on Sept. 10 and the 138 million bushels on hand a year earlier, the USDA said.

• Corn stockpiles on Sept. 1 totaled 1.708 billion bushels, up from 1.673 billion a year earlier Corn usage in the three months ended Aug. 31 was 2.6 billion bushels, up from 2.59 billion a year earlier, the USDA said.

• US GDP rose 3.7% in Q2.

• Trade between South Korea and Russia has recorded an over 50-fold jump since the two countries established diplomatic relations 20 years ago

• the Institute for Supply Management said its business barometer climbed to 60.4 in September.

• India’s sugar surplus may increase by as much as 50 percent in the year starting Oct. 1, the National Federation of Cooperative Sugar Factories Ltd. said yesterday.

We are on strike today

Quick Overview

• MoM The U.S. Conference Board’s confidence index fell to 48.5, lower than forecast, from 53.2

• The S&P/Case Shiller composite index of 20 metropolitan areas fell 0.1 % MoM but rose 3.2% YoY -- the smallest year-over-year gain since March, the group said. The index remains 27.9 % below the peak set in mid-2006.

• YoY Chilean copper output grew 1.3% in August to 467,680 metric tons from the 461,856 tons produced in August 2009.

• The La Nina weather event has strengthened even further and looks likely to last into early 2011, the government's Bureau of Meteorology reported Tuesday.

• India extended by a year the deadline for tax-free imports of rice to keep prices under check.

• Israel set up a new military intelligence unit to incorporate high-tech hacking tactics.

• Credit rating agencies warned Ireland that its debt is at risk of further downgrades.

• Ukraine grain export restrictions are possible, news items say..

• Pension funds will be looking to increase their gold holdings considerably after years of "negligible exposure," the director of global research from the Teacher Retirement System of Texas has said.

• The yields for Monsanto's SmartStax corn seeds are trailing those of its legacy VT Triple Pro and VT Double Pro products, said Jefferies analyst Laurence Alexander in a note to clients.

• The US Treasury sold $35 bln five-year notes at a record low yield of 1.26%.
  
  
  
• 
  
  Japan’s Tankan index for big manufacturers' sentiment was plus 8 in September, up for a sixth straight quarter and marking the best reading since March 2008.

Quick Overview

• China said it will slap a hefty tariff on U.S. chicken imports to combat what it says are unfairly low prices. The New import duties range from 50.3% to as much as 105.4 % will take effect Monday and last for five years.

• U.S. Congress moved a step closer to punishing China for allegedly manipulating its currency. A bill in the U.S. Congress would allow US companies to petition for higher duties on imports from China to compensate for an under-valued Chinese Yuan.

• The SEC denied a bid by China's largest credit rating firm to become an officially recognized statistical rating organization in the United States.

• YoY Japan's trade surplus dropped 37.5% in August
• YoY Japan's exports in August grew 15. 8 %

• Mexico's July economic activity index rose  5.1% YoY

Quick Overview

• Brazil’s orange crop may drop to 271.7 million boxes, be;ow the May 7 estimate of 286 million, Cutrale Corporate Affairs Director Carlos Viacava said in an interview last week. Production will decline from 305 million boxes last year.

• The roots of thousands of cocoa trees in Cameroon's chief cocoa-growing locality of the South-West Region are being attacked and killed by a strange, unidentified disease, farmers in the area told Dow Jones Newswires Sunday.

• Japans ruling party mulls $55B Stimulus plan.

• UK September house prices down 0.4% MoM but up 1.0% YoY

• (Dow Jones)--Jewish settlers marked the last day of Israel's construction moratorium in the West Bank with celebrations and vows to build at full steam on Monday.

• (FT) Tom Vilsack, the US secretary of agriculture, has played down recent increases in the price of wheat, corn and other food commodities, saying the world is not on the brink of a rerun of the recent food supply crisis. ..

Gold is the final refuge against universal currency debasement
So we have an early 1930s world where surplus states are hoarding money, instead of recycling it. A solution of sorts in the Great Depression was for each deficit country to devalue, breaking out of the trap (then enforced by the Gold Standard). This turned the deflation tables on the surplus powers – France and the US from 1929-1931 – forcing them to reflate as well (the US in 1933) or collapse (France in 1936). Contrary to myth, beggar-thy-neighbour policy was the global cure.

Quick Overview

• U.S. Durable goods for August fell 1.3%, the largest decline in a year, but excluding transportation orders, new orders rose 2%.

• The ICG cut its global rice production forecast for 2010-11 by 1.9 million tons to 453.7 million metric tons due to lower-than-expected production in Indonesia and China.

• National Australia Bank upgraded its wheat production forecast for this crop year to 23.1 million metric tons from a 22.2 million-ton estimate. The figure remains below the official estimate of 25.1m tonnes announced last week.

• France's GDP grew 0.7 %in Q2

• The unemployment rate in Brazil dropped to 6.7 % in August, compared to 8.1% in the same period last year.

• Drought in Brazil has pushed water levels in the Amazon River to the lowest since 1963, according to the National Water Agency.

• (Bloomberg) -- Half of Russian winter-grain plantings, already almost a third lower than last year, failed to sprout or are thin, the national Grain Producers’ Union said.

• German Ifo business climate index rose to its highest level in more than three years

Quick Overview

• The IGC cut by 5m tonnes, to 824m tonnes, its forecast for the global corn harvest in 2010-11.The IGC raised by 4m tonnes to 12m tonnes its forecast for the shortfall in corn production.
• The IGC raised by 1m tonnes, to 13m tonnes, its estimate of the shortfall in wheat production.

• YoY Colombia’s economy grew 4.5% in Q2

• EU consumer confidence in the 27-nation bloc stood at minus 11.8 in September, lower than minus 11.2 in August.

• U.S. sales of existing single-family homes and condos rose 7.6% in August to 4.13 million, the National Association of Realtors reported Thursday.

• The U.S. Conference Board said its leading economic index -- a composite gauge of ten indicators including weekly jobless claims, stock prices and the money supply -- rose 0.3% in August, after a 0.1% increase in July.

• Weekly U.S. jobless claims rose 12,000 to 465,000

• McDonald's boosts quarterly dividend by 11%

• India’s farm minister came out against the government’s proposed limits on cotton exports.

• (Bloomberg) -- Commodities have a “constructive” outlook, with supply constraints set to become a more dominant theme in the fourth quarter, Barclays Capital said. Demand for coal, aluminum, coffee, copper, crude oil, corn, sugar and soybeans probably will climb to a record this year, analyst Kevin Norrish said.

Quick Overview

• YoY U.S. House prices fell 3.3 % in July, the eighth consecutive decline, as foreclosed properties flooded the market, the Federal Housing Finance Agency in Washington said yesterday

• (Bloomberg) -- Microsoft Corp. raised its quarterly dividend by 3 cents, or 23 percent, to 16 cents a share and got approval from its board to sell as much as $6 billion in additional debt.

• MoM Industrial new orders in the euro zone dropped by 2.4% July.

• The U.S. Fed is more concerned with the pace of economic recovery and is "prepared" to take further steps (printing) to stimulate the economy if needed -- gold hits record.

• The U.S. DOE said:
• Supplies of crude rose 970,000 barrels to 358.3 million last week. This against analyst expectations for a drop of 1.7 million barrels
• Supplies of gasoline rose 1.59 million barrels to 226.1 million
• Supplies of distillate fuel, a category that includes heating oil and diesel, rose 347,000 barrels to 174.9 million.

• China consumed an estimated 35.54 million metric tons of oil in August, up 7.6% YoY

• Orders for new ships increased 17% YoY to 1.96 million gross tons in the January-June period

No update today

Quick Overview

• (Bloomberg) -- Record-low interest rates are stoking the biggest increase in U.S. share buybacks ever.

• John Bird, chief operating officer of sugar marketing body Queensland Sugar Limited, says "It's probably more panic buying by end users of sugar.. by refineries throughout the world,"A lot of refineries throughout the world who are reliant on supply out of Brazil have been very disappointed. "Some refineries have actually run out of sugar... which is not a good situation to be in."

• July values for U.S. beef and pork exports dipped slightly from the totals achieved in June, but both exceeded year-ago levels with beef posting close to a 40 percent jump over 2009 levels.

• China soybean, corn futures on Dalian Commodity Exchange sharply higher on concerns over possible early frost in northern China.

Quick Overview

• Weather forecasts refer to a "widespread crop ending hard freeze" across Northern Alberta southeastward to Central Saskatchewan with the mercury falling to 19-28F. A second hard freeze is forecast to push into the Dakotas on Saturday.
• Plus reports of frost in northern China potentially damaging corn.
• Tightening US supplies may extend corn's rally, Goldman Sachs says.

• U.S. CPI rose 0.3% in August.

• U.S. consumer sentiment fell in September to 66.6 -- the lowest level since August 2009

Quick Overview

• Brazil's drought has lowered the Amazon water level to its lowest in 47 years.
  
  
• Australia's Bureau of Meteorology reported Wednesday that indicators of a La Nina climate event in the Pacific have strengthened, with most computer models predicting it will persist into early 2011.

• Argentina made its first forecast for 2010-11 wheat production, estimating the crop at 10 million to 11.2 million metric tons. That's lower than the 12 million tons forecast by the U.S. Department of Agriculture. The USDA estimated Argentina's wheat crop last season at 9.6 million tons.

• The lineup of vessels expected to load sugar at Brazilian ports in the coming weeks rose by 62 in the week ended Wednesday to 100 ships, according to the Williams Brazil shipping agency.

• The U.S. balance of payments deficit, widened to $123.3 billion or 3.4% of GDP.

• The Philadelphia Fed's manufacturing index was -0.7 in September, up from the -7.7 reading in August.

• U.S. new jobless claims fell 3,000 to two-month low

• U.S. Producer prices rose 0.4%, largest gain in 5 months.

Quick Overview

• The Japanese government intervened in the forex market Wednesday for the first time in more than six years -- selling yen to curb the currency's strength

• Agronomists in coffee regions from near northern Sao Paulo to robusta-growing Espirito Santo said they were worried the drought could deal a blow to the crop if the rains, which usually return in late September, did not arrive soon.

• In the latest sign of trade curbs Belarus has banned exports to Europe of rapeseed oil

• YoY Peru's July GDP rose 9.05%

• U.S.  Industrial output rose 0.2 % after a 0.6% gain in July that was smaller than previously estimated.

• New Delhi, Sep 15, 2010: With the monsoon active all over India, there is no let up in the causalities resulting from H1N1 influenza virus attack. According to the latest release by the Indian Ministry of Health & Family Welfare, the lab confirmed cases reported during the week of Sep 6-12, 2010 are 1011; with 75 deaths reported during the same period.

• Israel’s industrial output rose by 14% YoY

• China's crude oil imports were 20.9 million tons or 4.94 million barrels per day in August, up from the 19 million tons in July or 18.47 million tons in the same month last year.

• Eurozoe inflation rate  at 1.6 percent in August.

• The unemployment rate in Britain for the three months to July declined by 0.1 % to 7.8 %

• A total of 18,541 new and resale houses and condos closed escrow last month in Los Angeles, Riverside, San Diego, Ventura, and San Bernardino and Orange counties. That was down 2.1 % from 18,946 sales in July, and down 13.8% from 21,502 sales in August 2009

• Warren Buffett ruled out a second recession in the U.S. and said businesses owned by his Berkshire Hathaway Inc. are growing. “I am a huge bull on this country,” ..

• (FT) AngloGold Ashanti, the world’s third-biggest gold miner, will wind up its hedge book by early 2011, joining Barrick Gold, the industry’s leader, in putting an end to the legacy of forward sales which pre-dates the boom in gold prices.

• GFMS  said central banks would buy about 15 tonnes of bullion on a net basis this year, a situation last seen in 1988.

• YoY combined imports into the ports of Los Angeles and Long Beach grew 23.9% August

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• Disappointing results from the early corn harvest in Illinois are not likely to improve as farmers continue gathering the crop. That's the word from Emerson Nafziger, extension agronomist at the University of Illinois at Urbana-Champaign.

• Continued dry conditions in Brazil  lifted sugar to fresh 6 1/2-month high, with the lack of moisture a concern for the sugar market.

• (Bloomberg) -- Stocks rose for a fifth day, the longest streak for the Standard & Poor’s 500 Index since July, while gold surged to a record and Treasuries gained on speculation the Federal Reserve will purchase as much as $1 trillion in bonds to bolster the economy.

• Yum Brands (YUM) will raise its quarterly dividend 19%.

• Cisco Systems (CSCO) announced it will initiate a dividend in its fiscal 2011, with yields of 1% to 2%.

• UBS predicts a 25 basis point rise in Swiss interest rates.

• U.S. businesses inventories rose 1.0% in July, The inventory-to-sales ratio, remained at 1.26.

• Give the wealthiest Americans a tax cut and history suggests they will save the money rather than spend it. ...Moody’s says.

• U.S. Retail sales rose 0.4% excluding autos. Core retail sales, which strip out autos, gasoline and building materials, rose 0.6% in August.

• YoY industrial production in the Eurozone rose 7.1 %.

• Indian inflation continued to slow to 8.51 percent in August from 9.78 percent in July.

The Basel Committee rules Yet the real show of generosity from the committee was in the timing of the new regime. Banks will have until January 2019 before they have to meet the new targets in full.

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• Global banking regulators in Basel, Switzerland have reached a deal on key parts of a major capital reform package, increasing the key capital ratio for the world’s banks to 7%.

• Container volume through Hong Kong rose 9.7 percent in July after growing by double digits in each of the year's first six months, the Hong Kong Port Development Council reported.

• China's industrial value-added output growth accelerated to 13.9% YoY in August from July's 13.4 % growth.
• China’s retail sales growth accelerated to 18.4% in August.
• Chinas exports grew 34.4 % YoY in August, slowing from July's 38.1, while imports rose 35.2 % in August, sharply up from the 22.7% in July
• China's broad money supply (M2) rose 19.2% YoY by the end of August, up 1.6% from July.
• YoY Chinas CPI rose 3.5% in August, the second consecutive month the CPI has exceeded the government's full-year target of 3 percent. Food prices, which have about a one-third weighting in the calculation of the CPI, rose 7.5% YoY. This is up from the 6.8% rise in July and 5.7% growth in June.

• The Indian Shipping Ministry said it plans to augment the country's overall port capacity from the current 1 billion tons to 3.5 billion tons over the next 10 years

• Japan and India reached a bilateral free trade agreement in Tokyo on Thursday. The pact will eliminate import tariffs on most products traded between the two giant Asian economies within 10 years.

• YoY Spaish home sales rose 16.4%

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• Inventories at U.S. wholesalers rose 1.3% in July

• QoQ Italy's gross domestic product grew by 0.5% in Q2 and by 1.3% % YoY

• The Consumer Price Index in Spain rose by 0.3% in August

• The Brazilian industrial earnings increased 11.4% in the first seven months of 2010

• Japan's GDP increased a revised 0.4 percent in April-June from the previous quarter

• The USDA's estmates:
• Corn production at 13.160 billion bushels
• Corn yield at 162.5 vs. the trade's guess of 163.1 bu. per acre
• U.S. corn ending stocks at 1.116 billion bushels vs. the trade's guess of 1.125 billion bushels for 2010-11
• Soybean production at 3.483 billion bushels
• Soybean yield at 44.7 vs. the trade's guess of 43.8 bu. per acre.
• U.S. soybean end stocks at 350 vs. the trade's guess of 304 million bushels
• Wheat ending stocks 902 mln bu, downn 50 mln from Aug.

• Bangladesh has became the latest nation to increase its official reserves of gold, buying 10 tonnes of the stuff

• Canada's August jobless rate out at 8.1%

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• New claims for U.S. unemployment insurance dropped by 27,000 to 451,000 -- more than expected, to their lowest level in two months

• The U.S. trade deficit shrank by 14 %, more than forecast in July as exports shot to their highest level since August 2008, painting a rosier picture for economic growth.

• Russia may follow up its ban on grain exports with curbs on shipments of rapeseed and sunflower seed and oil.

• MoM U.S. cocoa bean imports rose 90.9% in July, but fell 13.9% YoY.

• Stanford researchers have developed a water-purifying filter that makes the process more than 80,000 times faster than existing filters. The key is coating the filter fabric – ordinary cotton – with nanotubes and silver nanowires, then electrifying it. The filter uses very little power, has no moving parts and could be used throughout the developing world.

• Russia's GDP rose 4.2% in the first half of 2010 to 20.7 trillion rubles (about 670.6 billion U.S. dollars)

• Home sales in Spain rose 24.7% in Q2 from a year earlier

• Malaysia's Industrial Production Index in July increased 3.2 YoY

• Brazil: According to the nationwide household survey by Brazilian Institute of Geography and Statistics, the access to basic services has increased from 2004 to 2009.
• In 2004 only 50 million households had access to electric lighting. The number grew to 57.9 million in 2009.
• Waste collection reached 51.9 million households in 2009, up from 43.7 million in 2004.
• Water supply by a general network climbed to 49.5 million households in 2009 from 42.4 million in 2004.
• Workers' income increased 2.2 percent between 2008 and 2009, but failed to reach the level of 1996.
• The survey also showed negative figures, mostly due to the financial crisis. The unemployed surged from 7.1 million in 2008 to 8.4 million in 2009, up 18.5 percent.

• Private-sector analysts believe that China's official corn production estimate of 6.6 billion bushels is about 400 million bushels too high.

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• Stocks are helped today by a successful Portuguese debt offering easing risk aversion.

• Canada nudged its overnight rate target up 0.25% to 1%

• The Czech unemployment rate fell to 8.6% in August from 8.7% in July

• YoY Czech Q2 GDP rose2.4%

• YoY Hungary’s Industrial Output rose 9.0% in July

• Hungary will launch a flat 16% personal income tax next year

• Japan Finance Minister Yoshihiko Noda was the latest official to warn markets that Japan was ready to act, specifically raising the specter of intervention for the first time."We will take decisive steps--which of course include intervention--when it becomes necessary," Noda said.

• Japanese machinery orders rose 8.8% from June, when they increased 1.6%

• German July current account surplus out at EUR9.0B vs EUR10.6B in July 09

• German July trade surplus out at EUR13.5 B vs EUR14.3 B in July 09

• UK manufacturing output rose for a third straight month in July, growing 0.3% from June--the same monthly rate as in the two previous months. In annual terms output rose 4.9%

China’s young officers and the 1930s syndrome
“China’s military spending is growing so fast that it has overtaken strategy,” said Professor Huang Jing from the Lee Kwan Yew School of Public Policy in Singapore. (He kindly let me quote his remarks.)
“The young officers are taking control of strategy and it is like young officers in Japan in the 1930s. They are thinking what they can do, not what they should do. This is very dangerous.

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• Fresh worries about European banks sent stocks lower early Tuesday. The euro slid broadly and the yen hit a 15-year high.

• Obama will announce a six-year infrastructure revamp plan with an initial investment of $50 billion.

• The Association of American Railroads reported weekly rail traffic continues to set records with U.S. railroads posting their highest numbers for 2010 in both rail carloads and intermodal volume for the week ending Aug. 28, 2010.

• The EU finance ministers agreed on Tuesday to introduce a six-month period to monitor budgetary and structural polices of member states in a bid to strengthen economic governance of the 27-member bloc.

• Turkey's industrial production index rose 8.6% YoY.

• China agreed last month to lend Russia about $6 billion in exchange for increased coal supplies over the next quarter century, the Russian energy ministry said.

• A government spokesman said Pakistan may need 500,000 tonnes of sugar to meet growing demand at a time when its own cane crop has been devastated by floods.

• India's farm minister said the country's sugar production may come in at 22m tonnes in 2010-11, an estimate below consensus.

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• Private U.S. payrolls that exclude government jobs increased 67,000, after a revised 107,000 increase in July, Labor Department figures showed today. The unemployment rate edged up to 9.6% last month. The rise in the jobless rate reflected an increase in the labor force as some discouraged workers resumed the hunt for jobs.

• Informa projected the final U.S. corn yield would be 3.9% below the USDA's most recent estimate.

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• Pending U.S. home resale’s rose 5.2% after a revised 2.8% drop the previous month.

• U.S. first-time claims for unemployment benefits fell by 6,000 to 472,000 in the week ended Aug. 28.

• EU PPI rose by 0.2% MoM

• YoY EU GDP grew 1% in Q2

• Putin extended Russia's ban on wheat exports until next year's harvest to ensure it has bounced back from a severe drought and wildfires that destroyed 20 percent of the crop this year.

• Sweden raised the repo rate by 0.25% to 0.75 %

• Brazilian mills will produce 38.2 million metric tons of sugar this year, less than the 38.7 million tons estimated on April 29, Conab said.

• Sugar beet tests in Russia showed levels at 16.6%, 1 point higher than last year, but beet weights one-third lower at 292 grams.

• The sugar content of the French beet crop is currently at 15.8%, down from 17% in August.

• The International Cotton Advisory Committee cut by 700,000 tonnes to 9.8m tonnes its forecast for world cotton stocks at the end of 2010-11.

Obama was too cautious in fearful times

Panglossians who believe the private economy is always in equilibrium, unless governments intervene, disagree. I wish there were some way to run this experiment without hurting hundreds of millions of people. But I find the idea that allowing the collapse of much of the financial system, avoiding unconventional monetary policy and struggling to close the fiscal deficit would have been consistent with a more rapid and sustained recovery quite bizarre

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• China’s PMI rose to 51.7 in August from 51.2 in July.

• The Institute for Supply Management’s factory index rose to 56.3 from 55.5 in July

• Kingsman cut by 32% to 3.52m tonnes its forecast for the global sugar surplus in 2010-11.

• Vietnam's fiscal deficit hit 2.05 billion U.S. dollars.

• Thailand GDP growth for the first half of 2010 is about 10 %, the highest since 1995

• Indonesia's inflation rate in August reached 6.44 % up from 6.22 % in July.

• Brazil’s industrial production in July was up 0.4% Mom and up 8.7 % YoY.

• Canada's GDP expanded at an annualized pace of 2 % from April through June

• GM's August sales dipped 7% MoM

• MoM Peru's CPI rose 0.27% in August

• Chrysler August U.S. auto sales improved 6.9%. YoY Ford's sales fell 11%. GM's sales fell 25% YoY

• McKinsey Global Institute shows that Africa is now among the fastest-growing economic regions in the world.Africa's collective gross domestic product rose at a 4.9 % from 2000 through 2008, twice the pace of the preceding two decades.

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• U.S. Consumer confidence rose to 53.5 in August from a revised 51.0 in July

• The Standard & Poor's/Case-Shiller Home Price Indices, show the U.S. national home price index rose 4.4 % in Q2 , after having fallen 2.8% in Q1. Nationally, home prices are up 3.6% YoY.

• The Chicago purchasing managers' index fell to 56.7% from 62.3% in July

• Jobless rate in the Eurozone remained at 10% in July.

• Annual inflation in the Eurozone dropped slightly to 1.6% in August

• YoY average monthly wages at Japanese companies with at least five employees rose 1.3% in July

• YoY Japan's retail sales rose 3.9 % in July

• India saw 8.8% YoY GDP growth in the quarter ending June 30.

• South Korea's industrial output expanded for the 13th consecutive month in July by 15.5%

• ABN Amro analysts said Brazil, the world's top arabica producer, could "see much less rainfall" next year than is needed for the good development of the 2011-12 crop if this La Nina weather phenomenon proves a significant one

• Chile, the world's No. 1 copper producer, said its output of the red metal rose 6.3% YoY

No update today

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• U.S. Consumer spending rose 0.4% in July

• U.S. Personal income rose 0.2%.

• The Semiconductor Industry Association said worldwide semiconductor sales totaled $25.2 billion in July, up 1.2% MoM and up 37% YoY

• The Bank of Japan, under strong political pressure to stem the yen's surge, extended an emergency-loan to domestic financial institutions of Y10 trillion of six-month loans, but markets were unimpressed by the monetary easing.

• U.S. June crude oil use up 2.5%. The highest level in any month since October 2008.

• Chinese data Friday showed the country's early-season rice output, which accounts for about a fifth of total rice production, slipped by 6.1% compared with last year to 31.32 million metric tons.

• "We have now had almost constant rain for the last four weeks, and people are getting seriously concerned that the wheat harvest has suffered quality damage," a German trader said.

• Indonesia, which is the world's No. 2 robusta producer after Vietnam, may produce 500,000 tonnes of coffee beans this year, down from an estimated 550,000 tonnes in 2009, said Rachim Kartabrata, secretary general of the Indonesian Coffee Exporters Association.

• Poland's Q2 GDP rose 3.5% from the same quarter last year.

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• (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank “will do all that it can” to ensure a continuation of the economic recovery and that more securities purchases may be warranted if growth slows.

• U.S. GDP growth was revised downward to an annual rate of 1.6% in Q2, compared to an initial estimate of 2.4%, the Commerce Department reported Friday.

• Britain's economy expanded at a faster pace than initially thought, with growth of 1.2% in Q2

• Japanese Prime Minister Naoto Kan said on Friday the government would approve fresh stimulus measures.

• USDA's attaché in Moscow pegs 2010-11 Russian wheat production at 41 million tons, 9% below USDA's latest estimate. Traders expect R

• Russia will need to increase imports to make up for the shortfall.

• Sudden death syndrome disease is spreading in Iowa and Illinois.

• The USDA said rough rice combined stocks total 36.69 million hundredweight. That is "moderately greater" than USDA's 2009-10 ending stocks estimate of 33.9 million hundredweight in its Aug. 12 supply-and-demand report.

• Czarnikow: Our latest analysis indicates that the increase in global production will now not be enough to build a surplus across markets in the coming year. This means that the 10/11 balance sheet is more likely to be in equilibrium than surplus and that stock levels will remain fragile.

• Sugar prices gained on concern that dry weather will lower production in Brazil

• A new study from researchers in Canada and Sweden has shown that biosynthetic corneas can help regenerate and repair damaged eye tissue and improve vision in humans.

• (WGC) Over the longer-term, demand for gold in China is expected to grow considerably. A report recently published by The People’s Bank of China and five other organizations to foster the development of the domestic gold market will add impetus to the growth in gold ownership among Chinese consumers.

• (Bloomberg) -- Gold demand in Vietnam, which consumes more of the precious metal per head than India and China, is set to surge as the third devaluation in the past year and a stock-market slump combine to spur sales.