Quick Overview

• China's demand for vegetable oils will "rise sizably" despite efforts to slow its economy, Oil World says.

• Nearly 70% of American mayors are cutting back on road maintenance and projects as a result of the prolonged economic downturn, according to a new survey of mayors coast-to-coast commissioned by Reader's Digest and conducted by Harris Interactive.

• Borrowing costs for Portugal and Spain have surged to danger levels on fears that Europe's leaders are losing political control of the Irish crisis and have yet to agree on a coherent plan to tackle the euro zone’s deeper debt woes.

• Sales of U.S. existing homes fall 2.2% in October.

• U.S. third-quarter GDP revised to 2.5% growth.

• Gold prices rose as fears of escalating tension on the Korean peninsula and spreading sovereign jitters in Europe drove investors to seek safety.

• The Russian government will start selling grain from the state intervention fund if domestic grain prices rise to 7,000-8,000 rubles ($224-256) per ton, First Deputy Prime Minister Viktor Zubkov said Tuesday. The current price for grain stood at 6,000 rubles ($192).

Portugal next as EMU's Máquina Infernal keeps ticking
The eurozone will face its moment of existential danger the day that Portugal is forced to tap the EU bail-out fund. A third rescue in months will push the combined bill towards €300bn (£257bn) and risk exhausting the political capital of EMU, leaving little left for Spain even if the European Financial Stability Facility can in theory handle one more domino

Quick Overview

• Investors question whether international efforts to halt a full-blown Eurozone debt crisis are enough.

• The new Basel III banking rules will leave the biggest U.S. banks short of between $100 billion and $150 billion in equity capital, with 90 per cent of the shortfall concentrated in the top six banks, the Financial Times said.

• Singaporeans are the most optimistic consumers in the region, according to the latest Asian Consumer Confidence Index. The index rose 11 points to 137 in Q3.

• Soybeans rose on dry weather in parts of Brazil.

• Precious metals will produce the best commodity returns next year, Goldman Sachs said.

• (Bloomberg) -- Billionaire Warren Buffett said that rich people should pay more in taxes and that Bush-era tax cuts for top earners should be allowed to expire at the end of December.

Quick Overview

• India may produce 8.7 % less Sugar than estimated as rain pests and disease reduce yields.

• (FT) Top mints have seen their silver coin sales jump to record or near-record levels.

• Union Pacific will increase its dividend by 15% to 38 cents.

• The Philly Fed diffusion index rose to 22.5 in November from 1.0 in October.

Why America will come to regret the craven deal Obama is offering Netanyahu.
By Christopher Hitchens

This craven impotence will be noticed elsewhere, and by some very undesirable persons

Quick Overview

• China may impose temporary price controls on “important daily necessities” to counter the fastest inflation in two years, the State Council said today on its website.
• (Price controls have never increased supply! Today the price of corn on the CBOT is $5.25 and $8.10 on the Dalian)
• (Arlan Suderman) There is trade speculation that China may be manipulating the markets to buy large quantities of corn and soybeans before the end of the year.

• The UN warns the world must be vigilant against further supply shocks and prepare for even higher food prices next year if cereal production fails to increase significantly.

• US consumer price inflation rose just 0.2 % in October.

• The DOE said:
• Crude-oil inventories fell 7.3 million barrels
• Gasoline inventories fell 2.7 million barrels
• Distillates inventories fell 1.1 million barrels

• Demand for gold hit 922 metric tons in Q3, a 12% increase YoY, a trade group said.

• Fed Chairman Ben Bernanke told lawmakers the Fed's $600 billion economic aid program could create 700,000 jobs over two years.

• Buffett has written a 'Thank You' note to 'Uncle Sam' for preventing a catastrophic economic meltdown in September of 2008

• [AP] - The nation's largest banks must undergo new stress tests to show they can weather another recession, and the Fed said those that pass them can boost dividends paid to investors.
  
  
• U.S. New home starts fell 11.7% in October to an annualized rate of 519,000 -- the lowest rate in 18 months.

The horrible truth starts to dawn on Europe's leaders
He is admitting that the gamble of launching a premature and dysfunctional currency without a central treasury, or debt union, or economic government, to back it up – and before the economies, legal systems, wage bargaining practices, productivity growth, and interest rate sensitivity, of North and South Europe had come anywhere near sustainable convergence – may now backfire horribly.

Quick Overview

• (Bloomberg) China may impose price limits on food and toughen punishment of those found speculating on agriculture futures including corn and cotton to combat rising inflation, the China Securities Journal reported

• Korea raised rates by 0.25 points.

• U.S. retail sales grew 1.2% in October.

• Conditions for manufacturers in the New York area deteriorated sharply in November, with a New York Fed survey turning negative for the first time since June 2009.

• (Bloomberg) The International Monetary Fund reduced the weighting of the U.S. dollar and the yen and increased that of the euro in its Special Drawing Rights valuation basket after its regular five-year review.

• Mexico's tourism income rose 10.8% YoY.

• Japan's economy grew an annualized  3.9% in Q3.

Quick Overview

• (MarketWatch) -- German industrial giant Siemens AG raised its dividend for the latest fiscal year by 70% and outlined Thursday a new dividend policy, saying it plans to distribute 30% to 50% of net profit to shareholders.

• Intel raises dividend by 15%

• (Bloomberg) -- The world’s largest banks won a reprieve of at least a year before facing extra measures that would force them to rein in risk as divisions within the Group of 20 nations delayed an agreement on such rules.

• Fears that China is poised to raise interest rates and worries over the euro zone’s fiscal crisis earlier battered commodities.

• Euro-zone GDP rose 0.4% QoQ and 1.9% YoY

• The preliminary University of Michigan gauge of consumer sentiment rose to 69.3 from 67.7 in October.

• Prime Minister Ali Mujawar said Somali pirates are holding 813 sailors from across the world hostage.

• China's port capacity is estimated to be as much as 40% more than current demand.

• Japan’s GDPt rose an annualized 3.9 % in the three months ended Sept. 30.

Next Update Nov. 14

Quick Overview

• China posted a larger-than-forecast $27.1 billion October trade surplus. Exports gained 22.9 % YoY and imports rose 25.3 %.

• The CFTC plans to detail which institutions will be subject to tough new regulations on December 1

• Beijing and Washington policies put upward pressure on currencies elsewhere and risk return to trade protectionism -- so says Greenspam.

• Australia's unemployment rate rose to 5.4% in October, up from 5.1% in the previous month.

• Japanese core machinery orders fell 10.3% in September.

• The N.Y. Fed said Wednesday it will buy $105 billion in Treasury bonds over the next month.

• Cisco Systems is forecasting 3% to 5% revenue growth in its fiscal second quarter, down from current projections of 13% growth.

• YoY French CPI rose 1.6 %.

• YoY sales of new houses in Spain declined in September by 4.1 %, ending an eight-month-long sales surge.

• China's CPI rose 4.4 % YoY

• (Bloomberg) Copper for three-month delivery rose to as much as $8,800 a metric ton after Anglo American Plc said it’s receiving “huge” interest for 200,000 tons of new copper capacity it expects to bring online in 2012.

No update today

Quick Overview

• (World Bank) Asian economies may need to turn to capital controls as quantitative easing by the U.S. threatens to spur asset bubbles...

• USDA estimates wheat ending stocks at 848 m.b. bushels down 21 from the average pre-report trade guess and five under last month. This is a 34.7 stock to use ratio
• USDA estimates corn production at 12.540 billion bushels, 5 m.b. under pre-report estimates and 24 under last month. Leaving ending stocks at 827 m.b. This is a stock to use ratio of 6.2%. Globally world corn ending stocks were reduced by 3.2 MMT to 129.2 MMT
• USDA estimates soybeans Production was put at 3.757 b.b. 51 m.b. and 33 m.b. under last month. Ending stocks were down 30% from last month to 185 million bushels. This is a 5.5% stock to use ratio or 20 days worth of supply.

• Oil demand and price are set to grow steadily over the next 25 years despite environmental policies, essentially dooming climate-change goals, the International Energy Agency forecast on Tuesday.

• U.S. Inventories at the wholesale level rose 1.5 % MoM and 7.9% YoY

• The U.S. has lost its double-A credit rating with Dagong Global Credit Rating Co., Ltd., the first domestic rating agency in China, due to its new round of quantitative easing policy.

Quick Overview

• The longer than usual Indian monsoon, which usually ends by mid to late September, is reducing exports of iron ore.

• (Market Watch) -- Shares of Ambac Financial Group Inc. dropped late Monday after Bloomberg News reported the troubled bond insurer may file for bankruptcy as early as this week.

• Hedge funds ramped up bullish bets on oil to the highest level since at least June 2006.

• (Hellenic Shipping) Asian coal import demand is expected to be improved with the Asian winter season being a cold one. Adding to this positive expectation some port congestion may be experienced in Australian and Indonesian ports as many forward fixtures for thermal coal have been recorded during the past weeks, and all these fixtures can’t be accommodated without delays. This congestion might well be the extra boost we all want and hope for the dry cargo market” says Cotzias.

• Coal burned to generate power may jump 12% next year on Asian demand for the fuel and supply constraints says DB.
  
  
• (Bloomberg) Flooding across more than half of Thailand, the world’s largest rice exporter, may damage 11 percent of the nation’s rice plantation and lower output from the main crop by 3.9 percent, the Farm Ministry said.

Quick Overview

• YoY Colombia's coffee output is set to rise 11% in 2010/11 (October-September) to 9 million 60-kg bags, the country's exporters association said on Thursday.

• U.S. pending sales of homes fall 1.8% in September

• U.S. nonfarm payrolls rose by 151,000 for October -- jobless rate steady at 9.6%.

• Brazil's industrial production increased 6.3% YoY in September

• The Spanish economy registered zero growth in Q3.

• Japan's central bank left key rate on hold.

• MoM Industrial producer prices in the euro zone rose by 0.3 % in September

• YoY Interregional trade in Central America grew 6 % during the first half of 2010

• China is offering buyers of plug-in hybrids and pure electric cars subsidies of as much as 60,000 Yuan ($9,000) to help cut pollution and reduce oil dependency.

• Japan’s September leading indicators fell 0.6 % MoM.

Doubts grow over wisdom of Ben Bernanke 'super-put'
Bond funds are already restive. Pimco's Bill Gross says the great bull market in bonds is over, denigrating Fed policy as the greatest "ponzi scheme" in history. Warren Buffett has chimed in too, warning that anybody buying bonds at this stage is "making a big mistake",

Volcker Rule to Hurt Shareholders, Competitiveness, Bachus Says
The rule aims to reduce the chance that banks will make risky investments with their own capital that put their federally insured deposits at risk.

Copper to Surge on ‘Mammoth Demand,’ Standard Chartered Says “Things are not looking very rosy on the supply side given Chile and Peru’s reduction in output,” said Haigh, who joined Standard Chartered in July. “We are seeing mammoth demand for copper from China and these two suppliers cannot keep pace.”
The copper market may turn to a deficit of 723,000 tons in 2011 from a surplus of 112,000 tons this year, with the gap widening to 1.2 million tons in 2012 and further to 1.5 million tons in 2013, according to Haigh’s presentation. The Lisbon- based International Copper Study Group last month forecast a 2011 deficit of 435,000 tons.

Next Update Nov. 7

Quick Overview

• U.S. factory orders in September rose 2.1%, the third consecutive monthly increase.

• The Fed will buy an additional $600 billion of Treasuries through June

Aussie dollar breaks the buck as Australia, India fight Fed with 'quantitative tightening'
Australia's reserve bank said the "the economy is now subject to a large expansionary shock from the high terms of trade and has relatively modest amounts of spare capacity. The risk of inflation rising again over the medium term remains".

Quick Overview

• India boosted interest rates by a quarter-point to 6.25.

• Australia’s central bank surprises the market with a 0.25 interest rate increase.

• The Institute for Supply Management’s factory index increased to 56.9 from 54.4

• Total volume of China's foreign trade is expected to hit 2.8 trillion U.S. dollars for the whole year of 2010, up 25 % YoY, the Ministry of Commerce said.

• China’s purchasing managers’ index rose to 54.7 from 53.8 in September, beating expectations.

• Moody’s' said Greece, Portugal and Ireland are likely to avoid sovereign bond defaults due to strong domestic demand from local banks and pension funds

• The Economic Times reported that India may resume sugar exports next month and the government is expected to accelerate applications from mills for shipment of about 500,000 metric tons

No update today

Quick Overview

• U.S. Durable goods rose by 3.3% in September to $199.2 billion.

• U.S new home sales rose 6.6% in September to a seasonally adjusted annual rate of 307,000 units. The median sales price for those homes was $223,800, while the average sales price was $257,500.

• U.S. Initial jobless claims decreased by 21,000 to 434,000 in the week ended Oct. 23, the lowest since early July.

• YoY industrial profits in 24 Chinese provinces and regions rose 53.5% in the January-September period.

• Eurozone economic confidence continued to rise in October, the ESI for the 16-nation bloc increased by 2 points to 104.1. And for the 27-member European bloc, the ESI also rose to 104.1 points, up by 1 point.

• The German unemployment rate fell by 7.5% YoY, staying at about 2.9 million, the lowest level since 1992.

• About 2.5 % of Thailand’s cane-growing area has been damaged in the country’s worst flooding in five decades, said the secretary-general of the Office of the Cane and Sugar Board.

• India's sugar output is expected to jump by nearly a half in the new 2010-2011 season from October, with a bigger cane crop and improved yields after late rains, the chief of Sucden India said.

No update today

QuickOverview

• Home prices in 20 U.S. cities rose at a slower pace than forecast in August from a year earlier, reflecting slumping sales as the effects of a tax credit waned. The S&P/Case-Shiller index of property values increased 1.7% from August 2009.

• The Conference Board’s confidence index rose to 50.2 from a revised 48.6 in September

• U.K. third-quarter GDP grew 0.8% QoQ and 2.8% YoY, possibly easing pressure on the Bank of England to stimulate the economy with more quantitative easing.

• Russian Federal State Statistics Service, or Rosstat, said on Tuesday food prices in the country rose 9.2% in the period of January to September, 6 times the 1.5% seen in the EU.

• Record sugar prices on Brazil's local market could induce mills to buy back more sugar from exporters to be sold locally. "As long as local prices are higher than those abroad, it is quite natural that this will continue happening," said Arnaldo Correa, director at Archer Consulting.

• The worst flooding for decades in Thailand has swamped thousands of acres of farmland. Thailand is the world's biggest rice exporter, the top rubber exporter and the second-biggest sugar exporter.

• USDA crop condition report for wheat, the first of the season, placed 47% of the crop in good/excellent condition -- the worst start in fifteen years.
  
  
  
  

Toxic Brew Most of these bodies call themselves “free market thinktanks”, but their trick, as (Astro)Turf Wars points out, is to conflate crony capitalism with free enterprise, and free enterprise with personal liberty.

The WikiLeaks Iraq Logs
A Protocol of Barbarity The online whistleblower platform WikiLeaks is posting close to 400,000 US military reports from the Iraq war on the Web. The logs show in detail how brutally the war was waged and the helplessness with which the United States acted. By SPIEGEL Staff

Quick Overview

• The Treasury Department sold $10 billion in 5-year Treasury Inflation Protected Securities on Monday at a yield of negative -0.55%, the first time the yield on the maturity has come in below zero.

• Czarnikow expects Sugar consumption to rise 50% over next 20 years

• The National Association of Realtors said US existing home sales rose 10% to a seasonally adjusted annual rate of 4.53 million, from a downwardly revised 4.12 million in August.

• (Telegraph) In an article published in Angelaki: Journal of the Theoretical Humanities, Dr Crosthwaite says that the willingness of banks to deal in subprime loans and related derivatives, which were bound to result in disastrous losses, can only be understood if the bankers unconsciously desired the destruction of their own institutions.. Dr Crosthwaite argues that such catastrophic losses can be sources of masochistic pleasure for those who experience them.

• Chinese imports of Australian ore reached 26 million tonnes in September, up 34 % MoM.

• U.S. scientists said Monday that large amounts of oil have accumulated on the Gulf of Mexico seafloor, contradicting earlier statements by federal officials that the oil leaking from BP's damaged underwater well had largely gone.

• MoM Industrial new orders in the euro zone rose by 5.3% in August

• WTO says U.S. ban on China poultry products illegal

• (Bloomberg) -- Thailand’s government halted sales of rice from state stockpiles because of concern that floods will damage crops and reduce production of the grain

German boom creates ECB policy nightmare as south lags
"Germany is recovering brilliantly," said S&P's Jean-Michel Six. "Its products are not price-sensitive to the exchange rate. It is entering a virtuous circle where exports lead to capital spending, leading in turn to consumption after years of quasi death."

Quick Overview

• Bloomberg / Businessweek 10/31/2010: The top 20% richest Americans own 84% of the nation’s total wealth. The poorest 20% own 0.1%

• (FT) Finance ministers, meeting this weekend in the South Korean city of Gyeongju, agreed for a policy framework to contain large current account surpluses and deficits, but a proposal to set specific targets ran into opposition.

• (FT) Overlay Asset Management, a $20bn foreign exchange manager, is launching a currency basket it claims represents a "virtual world reserve currency".

• (Reuters) - Britain's finance minister George Osborne is unnecessarily risking the economic recovery with his deep spending cuts; the country's new Nobel Prize winning economist was quoted as saying on Saturday.

• WikiLeaks said on Saturday its release of nearly 400,000 classified U.S. files on the Iraq war showed 15,000 more Iraqi civilians died than previously thought.

• Google said its "Street View" cars around the world "accidentally" collected more personal data than previously disclosed, and that it was changing its privacy practices.

• (Reuters) Israel cannot use the Biblical concept of a promised land or a chosen people to justify new settlements in Jerusalem or territorial claims, a Vatican synod on the Middle East said on Saturday.

• QoQ Australian producer prices rose 1.3% in Q3 of 2010 and rose 2.2% YoY
  
• Japan’s exports climbed 14.4% YoY
  
  
• Russia extended its ban on grain exports to July 1
  
  

The Next Idiot Might Be You More than one hundred fifty years ago, two candidates for state senate conducted a series of seven debates, vying for control of the Illinois state legislature. The main issue was slavery. The first candidate had 60 minutes to speak. The second, then had 90 minutes to both deliver his own speech and rebuttal. Then 30 minutes were offered to the first speaker. One was Abraham Lincoln. The other, Stephen Douglas. Which of our national politicians, or talk show hosts, is up to that exercise? Sixty minutes on the mortgage crisis, Wall Street, and the economy.

Today, rigorous debates mostly take place in a side-current of high school and college extra-curricular activities. It is not exactly a lost art. A fair percentage of the million plus attorneys in the U.S. learned the skill of debate at some point in their training. Think about the intellectual qualifications to organize a thirty minute rebuttal; thoughtfulness, mastery of complex subjects, the ability to communicate and to build a line of logic that is understandable. Imagine giving Sarah Palin that challenge.

Quick Overview

• U.S. Initial jobless claims fell by 23,000 to 452,000 in the week ended Oct. 15

• Russia to privatize 900 state enterprises by 2015

• IMF Director for Asia Pacific Region Anoop Singh said Asia remains firmly in the lead of the global economic recovery and strong growth in the region is set to continue.

• The German government raised 2010 economic growth estimate to 3.4 % from April's 1.4 %

• Chinese officials said China processed 8.49 million barrels of crude oil per day in September, 6.6% more than last year and its second highest level ever.
• China’s Q3 GDP rose 9.6% YoY
• China’s Sept. CPI rose 3.6 % YoY
• China’s Sept. industry output rose 13.3% YoY
• Rice supply concerns underpin gains as Typhoon Megi approaches coastal China crop areas.

• US crude inventories rose by 700,000 bbl to 361.2 million bbl
• Gasoline stocks rose 1.2 million bbl to 219.3 million bbl
• Distillate fuel inventories fell 2.2 million bbl to 170.1 million bbl

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.