Baltic dry sea freight index makes record fall
But analysts said the fall was not related to growing fears of economic recession.

Paulson Says Time `of the Essence' in Any Stimulus (Update1)
..said President George W. Bush still hasn't decided if tax cuts or other fiscal measures are necessary.

Soybeans Soar to Record High as Rising Demand Shrinks Supply
The reserves of corn before the next harvest represent 11.1 percent of consumption, down from 14.2 percent forecast last month and 11.6 percent last year, USDA data show. Soybean inventories as a percent of consumption will fall to 5.9 percent this year from 18.7 percent last year, the USDA said.

Quick Overview

• India's industrial growth slowed to 5.3 percent in November.
  

• China's trade surplus shrank to $22.7 billion from $26.2 billion in November, versus 24.4 expected
  

• YoY China's M2 rose 16.7%.
  

• U.S. Trade deficit rose 9.3% to 63.1 billion, the most in two years.
  
  

• The USDA's estimates 2007-2008 U.S. ending stocks:
  Corn was lowered from 1.797 to 1.438 billion bushels
  Soybeans were lowered from 185 to 175 million bushels
  Wheat was increased from 280 to 292 million bushels.
  Sugar was lowered from 2.050 to 2.006 million tons.
  Cotton was increased from 7.70 to 7.90 million bales.
  

• The USDA estimates 2007-2008 world ending stocks:
  Corn was lowered from 109 to 101 million tons.
  Soybeans were lowered from 47.3 to 46.2 million tons.
  Wheat was increased from 110 to 111 million tons.
  Cotton was lowered from 55.3 to 54.75 million tons.
  

• The USDA anticipates 46.61 million acres of winter wheat to be planted in 2008, up 3.6% YoY.
  

• The USDA estimates Florida's orange crop at 168 million boxes and juice yield of 1.60 gallons per box.
  
  

• The USDA estimates Argentina’s soybean crop unchanged at 47 million tons
  

• The USDA estimates Brazil's soybean crop at to 60.5 million tons, down from 62 million tons.
  

Quick Overview

• Bernanke said “We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks.''
  
  

• The U.S. Commerce Department said that wholesale sales rose 2.2% in November.
  

• The U.S. Labor Department said jobless claims were down 15,000 to 322,000.
  

• Russia's inflation rate rose to 11.9 percent in 2007.
  

• The Bank of England kept its key lending rate unchanged at 5.50%.
  

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

• A survey showed that U.S. farmers planted about 48.5 million acres of winter wheat. YoY this is up 7.8%, from low levels, and the most in 12 years. The USDA reports tomorrow.
  

• Cepea estimates Brazils 2008 coffee demand at 46 million bags and production at 41.2 to 44.1 million bags. This depletes Brazil's non-government stockpiles further, which are at 7.77 million bags -- down 50% YoY.
  
  

• The U.S. DoE said underground supplies of natural gas fell 171 billion cubic feet last week to 2.750 trillion cubic feet. Supplies are down 9% YoY.
  

• Statistics South Africa said November gold production fell 12.7% YoY..
  

China poised to be world leader in renewable energy, expert predicts
"I think China will be number one in less than three years in every renewable energy market in the world," Worldwatch president Chris Flavin told reporters at the launch of the annual "State of the World" report.

Quick Overview

• Bush is "considering" a stimulus plan that would offer tax rebates for individuals and tax breaks for businesses.
  
  

• Goldman's Jan Hatzius issued a recession call. He says the economy should contract modestly through late 2008, with a gradual recovery during 2009. The recession is likely to last two to three quarters and should be relatively mild by historical standards, he says.

• GDP in the Euro area rose 2.7%
  
  

• The U.S. Department of Energy said that:
  Supplies of crude oil fell 6.8 million barrels to 282.8 million barrels.
  Supplies of gasoline rose 5.3 million barrels
  Supplies of heating oil fell 2.3 million barrels.
  Refinery use rose 89.4% to 91.3% of capacity.
  Gasoline demand rose 0.4% YoY
  Distillate demand rose 4.9% YoY
  
  

• India’s 12 major ports have had a 22.16% increase in container throughput volumes between April and November, 2007.
  

Nukes, Spooks,
and the Specter of 9/11
We're in big trouble if even half of what Sibel Edmonds says is true…

If Soy Is Expensive, Why Does Goldman Say Nevermind?
Rising wealth from Shanghai to Sao Paulo is leading to better diets and straining corn and soybean supplies just as record energy prices boost sales of biofuels. Even after rising 17 percent in 2007, corn costs about $2 a bushel after adjusting for inflation, compared with a $7.80 high in 1974.

Quick Overview

• Retail sales volume in the Euro area fell 0.5% in November.
  

• The National Association of Realtors' index of pending home sales dropped from 89.9 to 87.6 in November, better than expected.

• The Supreme Court imposed a six-year statute of limitations for suing the federal government in property disputes.
  

• Gold futures rose to an all-time high above $875. However, inflation adjusted, gold remains well below its all-time high
  

• Saudi Arabia announcement they intend to gradually stop producing wheat and that they will import all of their needs by 2016 in order to conserve water. Currently, Saudi Arabia uses about 2.5 million tons per year.
  

• Goldman Sachs has made a deal to buy a 20 percent stake of China shipbuilder Yangfan Group, and the Wall Street bank will help the Chinese shipbuilder to go public as early as 2008
  

• NYK president Koji Miyahara said his 740 ships must cut speed by 10% to save fuel. Fuel prices have risen from $164 a ton five years ago to $500 today. "If a single containership daily consumes 200 tons of fuel costing $500 per ton, its fuel cost will reach as high as $100,000 in just a day," he said.

Quick Overview

• Bush acknowledged that economic indicators are causing worry for Americans, but said the economy is resilient. Paulson stressed the administration is combating the country's housing crisis.
  
  

• QoQ the U.S. office vacancy rate rose to 12.6%. This is the first increase after 16 consecutive quarterly declines.
  

• The unemployment rate in the Euro area unchanged at 7.2% in November.
  

• EU Producer prices rose 0.8% in November and up 4.1% YoY.
  

• Germany's cocoa grindings rose 17% in 2007.

• China plans to import 1.1 million metric tons of soybeans and 73,000 tons of soy oil to curb rising food inflation of 18.2% currently.

• Malaysia has called on stores to ration cooking oil because of panic buying sparked by rumours that the government will raise the price of the household commodity
  

White House considering stimulus package
Some suggested a one-year tax rebate of $500 might provide a sufficient shot-in-the-arm for the economy. But they stressed that the proposal would have to be passed quickly.

The Edge Annual Question — 2008
When thinking changes your mind, that's philosophy.
When God changes your mind, that's faith.
When facts change your mind, that's science.

Quick Overview

• The U.S. unemployment rate rose from 4.7% to 5.0% in December -- less than expected.
  
  

• The Institute of Supply Managements' index of services dropped from 54.1 to 53.9 in December.
  
  
  

• Services in the U.K. increased from 51.9 to 52.4 in December, more than expected.
  
  
  

• The U.S. Department of Energy said that underground supplies of natural gas were down 87 billion cubic feet last week
  
  

• It is estimated that Funds had $110 billion to invest into the commodity markets in 2007. The estimate for 2008 is expected to grow by 36% to $150 billion.
  
  

• The Far Eastern Freight Conference said its member shipping lines had increased volume 19.4% on westbound Asia-Europe/Med routes in November.
  
  

• From January to November 2007, eastern China's Anhui province handled 9.8 million tons of imports and exports, up 73% YoY.

Dow's Worst Start Since 1983 May Herald Gains, JPMorgan Says
The Dow has posted an average rise of 14 percent following the 10 worst yearly starts since 1901, based on returns tracked by JPMorgan. That compares with a 7 percent average advance for all years.

Quick Overview

• U.S. Factory orders rose 1.5% in November, the most in four months, according to the Commerce Department - versus 0.5% expected.
  

• A report from ADP Employer Services showed companies in the U.S. added 40,000 jobs in December, more than expected.
  

• Euro-Zone M3 monetary total showed November YoY growth of 12.3%.
  
  

• The unemployment rate in Germany improved from 8.6% to 8.4% in December, the lowest in 15 years.
  
  

• The U.S. Department of Energy said that:
  Supplies of crude oil fell 4.0 million barrels last week to 289.6 million barrels.
  Supplies of gasoline rose 1.9 million barrels
  Supplies of heating oil fell 1.4 million barrels.
  Refinery use rose from 88.1% to 89.4% of capacity last week.
  Gasoline demand rose 0.1% YoY
  Distillate demand rose 5.7% YoY.
  
  

• The Philippines, the world's biggest importer of rice, plan to buy 550,000 metric tons. Global stockpiles of rice are forecast by the USDA to fall to 72.2 million tons by July, the lowest since 1984.
  

U.S. at the Bottom of Global Privacy Rankings
Other low ranking countries include: China, Russia, Thailand, Taiwan, Singapore, Malaysia, and England. Greece was the highest ranking country when it came to citizen privacy protection.

Quick Overview

• The Institute for Supply Management's manufacturing index dropped to 47.7 from 50.8, the lowest reading since April 2003.
  
  
  
• Construction spending rose 0.1% in November, the Commerce Department reported Wednesday.
  

• The average price of diesel fuel rose 3.7 cents to $3.345 a gallon, while gasoline rose 7.3 cents to $3.053, the DoE said.
  

• Oil rose to a record $100 on geopolitical turmoil, tight energy stockpiles, and a weak dollar.
  

• U.S. class 8 truck sales continued soft in November, with original equipment manufacturers selling 10,309 vehicles — down 54.3% YoY.
  
  

• India reduced import duties on vegetable oils from countries of the South Asian Free Trade Agreement. The import duty on refined vegetable oils of edible grade has been reduced to 20% from the earlier 52.5% for imports from Pakistan and Sri Lanka, while imports from the other four SAFTA countries will be duty free, versus 26.25% previously.
  
  

• Scientists are on the verge of decoding the special chemical language that bacteria use to "talk" to each other, British researchers report. The research could lead to new treatments for antibiotic-resistant bacteria, including "superbugs" that infect more than 90,000 people in the United States each...
  

• Dec. 31
  U.S. existing home sales unexpectedly rose 0.4% in November to an annual rate of 5.0 million units. YoY home sales are down 20%.
  
  


• Dec. 30
  (Bloomberg) -- China, the world's biggest grain producer, will tax exports of wheat, corn and rice to increase domestic supply and control rising food prices. Exporters of wheat will start paying a 20 percent tax on Jan. 1, while the tax for corn and rice was set at 5 percent..
  Beijing approved the launch of China’s first gold futures contracts, with simulated trading on the Shanghai Futures Exchange.
  

• Dec. 28
  U.S. new home sales fell 9.0% MoM. YoY new home sales are down 25%.
  The Chicago purchasing managers' index increased from 52.9 to 56.6 in December, stronger than expected. The December of 2008 eurodollars closed up .14 at 96.565, influenced more by today's weak home sales figures.
  As of January 1st, Brazil will require at least 2% of all diesel fuel to be biodiesel.
  The U.S. Department of Energy said that underground supplies of natural gas dropped 165 billion cubic feet last week to 3.008 trillion cubic feet. Supplies are now down 4% YoY and up 8% from the five-year average.
  
  Japans consumer rose 0.6% YoY, the biggest rise in nine years.
  Japans unemployment rate improved from 4.0% to 3.8% in November, better than expected.
  Japans industrial production fell 1.6% in November.
  

Happy Holidays!

(Updates resume Jan.2)

A couple of charts for Fed watchers

Bank Borrowings:


Bank Free Reserves:

Unpaid credit cards bedevil Americans "The desires of consumers to want, want, want, spend, spend, spend — it's the fabric of our nation," said Howard Dvorkin, ..

Quick Overview

• U.S. Personal incomes rose 0.4% in November.
  

• U.S. Consumer spending rose 1.1%.
  
  

• The University of Michigan's consumer sentiment index fell from 76.1 to 75.5
  
  

• Canada’s GDP rose 0.2% in October and up 2.8% YoY.
  

• U.K.'s retail sales rose 0.4% in Novembe
  

• Australia’s leading Indicator rose 0.9%
  
  

• The USDA said there were 12.081 million head of cattle on feed on December 1st, up 0.9% YoY. Placements in November rose 12.3% while marketing's fell 3.3%.
  

• The USDA also said that pork production rose 8% YoY.
  The USDA said there were 477 million pounds of frozen pork in storage, up 2% YoY. Frozen bellies totaled 34.5 million pounds, up 13% YoY.
  

• The USDA said there were 564 million pounds of frozen orange juice in storage, down 13% YoY.
  

• The Far Eastern Freight Conference said its member’s lines are preparing an unspecified eastbound tariff increase to take effect on April 1. The eastbound trade between Europe and Asia continues to experience substantial growth with a current level of 7% while trade with China is growing at 15%," the FEFC said.

Quick Overview

• U.S. GDP rose 4.9%
  

• U.S. leading indicators fell 0.4%
  

• U.S. jobless claims rose12, 000 to 346,000
  
  

• China increased its lending rate from 7.29% to 7.47%. For the year, this is increase #6
  

• U.K.'s GDP rose 0.7% QoQ and up 3.3% YoY
  

• Japan kept the interest rate unchanged at 0.50%
  

• The port of Long Beach is instituting a “green tax” of $35 to $79 per loaded container.
  The tax will take effect by June and is expected to raise $1.6 billion to replace or retrofit 16,800 trucks to reduce emissions. The Port of Los Angeles is expected to copy the scheme.
  

• Hong Kong’s container port volume rose 1.6% in the first 11 months, but fell 2.4% in November
  

Quick Overview

• Japan's reduced its GDP growth estimate for 2007-2008 from 2.1% to 1.3%.
  
  
• Business confidence in Germany fell from 104.2 to 103.0 in December -- a two year low.
  

• MoM home foreclosure filings fell in November, a real estate data company reported on Wednesday.
  

• Bush signed legislation that requires auto makers to raise fuel efficiency by 40% to an industry average 35 miles per gallon by 2020. It also ramps up production of ethanol use to 36 billion gallons a year by 2022.
  
  

• The U.S. department of energy said that:
  Supplies of crude oil fell 7.6 million barrels to 296.9 million barrels.
  Supplies of gasoline rose 3.0 million barrels
  Supplies of heating oil fell 2.1 million barrels.
  Refinery use fell from 88.8% to 87.8%
  Gasoline demand rose 0.3% YoY
  Distillate demand rose 4.3%.
  
  

• Canada confirmed the discovery of that country's eleventh case of BSE Tuesday. The latest case involves a 13 year-old beef cow in Alberta.
  

• South Korea said it would eliminate import taxes on corn, wheat and soybeans to curb food inflation.
  

• Shangyu port is planning new terminals with total annual capacity of 10 million tons. Capacity of the new port will be 40 times larger than the present Shangyu facility, which can accommodate 3,000-tonne vessels and handle 245,000 tons of cargo a year, Xinhua reported.

Quick Overview

• U.S. housing starts fell 3.7% MoM, in 2007 housing starts are down 24% YoY.
  

• YoY consumer prices in Canada rose 2.5%.
  

• YoY U.K.'s consumer prices rose 2.1%

The Last Empire: Can the world survive China’s rush to emulate the American way of life?”.
“Per-capita income in China is less than 1/10 of America’s and its per-capita greenhouse gas emission is less than 1/5 of ours. But if 1.3 billion Chinese were to consume at the level Americans do, we’d need several more Earths. China’s effect on world resources, quantified:
China is:
• The world’s largest consumer of coal, grain, fertilizer, cell phones, refrigerators, and televisions
• The leading importer of iron ore, steel, copper, tin, zinc, aluminum, and nickel
• The top producer of coal, steel, cement, and 10 kinds of metal
• The No. 1 importer of illegally logged wood
• The third-largest producer of cars after Japan and the United States; by 2015, it could be the world’s largest car producer. By 2020, there could be 130 million cars on its roads, compared to 33 million now.
More Facts:
• China produces half of the world’s cameras, 1/3 of its television sets, and 1/3 of all the planet’s garbage.
• There are towns in China that make 60% of the world’s button supply, 1/2 of all silk neckties, and 1/2 of all fireworks.
• China uses half of the world’s steel and concrete and will probably construct half of the world’s new buildings over the next decade.
• Some Chinese factories can fit as many as 200,000 workers.
• China used 2.5 billion tons of coal in 2006, more than the next three highest-consuming nations—Russia, India, and the United States—combined.
• It has more than 2,000 coal-fired power plants and puts a new one into operation every 4 to 7 days.
• Between 2003 and 2006, worldwide coal consumption increased as much as it did in the 23 years before that. China was responsible for 90% of the increase.
• China became the world’s top carbon dioxide emitter in 2006, overtaking the United States.
• Russia is China’s largest timber supplier; half of all logging there is illegal. In Indonesia, another timber supplier to China, up to 80% of all logging takes place illegally.
• 90% of all wood products made in China are consumed in the country, including 45 billion pairs of wooden chopsticks each year.
• The value of China’s timber-product exports exceeds $17 billion. About 40 percent go to the United States.
• More than 3/4 of China’s forests have disappeared; 1/4 of the country’s land mass is now desert.
• Until recently, China was losing a Rhode Island-sized parcel of land to desertification each year.
• 80% of the Himalayan glaciers that feed Chinese rivers could melt by 2035.
• In 2005, China’s sulfur-dioxide emissions were nearly twice those of the United States.
• Acid rain caused by air pollution now affects 1/3 of China’s land.
• Each year, at least 400,000 Chinese die prematurely of air-pollution-linked respiratory illnesses or diseases.
• A quarter of a million people die becau! se of mo tor-vehicle traffic each year—6 times as many as in the United States, even though Americans have 18 times as many cars.
• Of the world’s 20 most polluted cities, 16 are in China.
• Half of China’s population—600 to 700 million people—drinks water contaminated with human and animal waste. A billion tons of untreated sewage is dumped into the Yangtze each year.
• 4/5 of China’s rivers are too polluted to support fish.
• The Mi Yun reservoir, Beijing’s last remaining reliable source of drinking water, has dropped more than 50 feet since 1993.
• Overuse of groundwater has caused land subsidence that cost Shanghai alone $12.9 billion in economic losses.
• Dust storms used to occur once a year. Now, they happen at least 20 times a year.
• Chinese dust storms can cause haziness and boost particulate matter in the United States, all the way over to Maine.
• In 2001, a huge Chinese storm dumped 50,000 metric tons of dust on the United States. That’s 2.5 times as much as what U.S. sources produce in a typical day.
• Currently, up to 36 percent of man-made mercury emissions settling on America originated in Asia.
• Particulate matter from Asia accounts for nearly half of California’s annual pollution limit.
• Environmental damage reportedly costs China 10 percent of its GDP. Pollution-related death and disability heath care costs alone are estimated at up to 4 percent of GDP.
• In 2005, there were 50,000 pollution-related disputes and protests in China.
• China’s middle class is expected to jump from 100 million people today to 700 million people by 2020.

Fed Taking on Abusive Lending Practices
The Fed is considering:
-barring lenders from penalizing subprime borrowers - those with spotty credit or low incomes - who pay their loans off early.
-forcing lenders to make sure that borrowers, especially subprime borrowers, set aside money to pay for taxes and insurance.
-restricting loans that do not require proof of a borrower's income.
-examining lenders' failure, in some cases, to consider a borrower's ability to repay a home loan.
-improving financial disclosure so people better understand the terms and conditions of their mortgages and get this information when it is most useful.
-curtailing abuses in mortgage advertising.

Quick Overview

• Support is growing on several fronts in Washington for mortgage-industry reforms and homeowner-assistance programs.
  

• Foreigners purchased $118.0 billion of U.S. securities in October while U.S. purchases of foreign securities amounted to $4.1 billion.
  

• The National Association of Home Builders sentiment index stayed at 19, the lowest since the index began in 1985.
  
  
  

• Manufacturing and services index in the Euro area fell from 54.1 to 53.3 in December
  
  

• Japan's tertiary index rose 1.1% in October
  
  

• China's third largest container port, Qingdao, handled more than nine million TEU during 2007, up 23 % YoY.
  

• The USDA said that last week's export inspections of:
  Corn totaled 46.6 million bushels, up 13% YoY.
  Soybeans totaled 35.6 million bushels, up 42% YoY.
  Wheat totaled 19.4 million bushels, up 63% YoY.
  
  

• The U.S. Senate's latest energy bill wants 36 billion gallons of renewable fuels to be used in U.S. vehicles by 2,022. Some 15 billion gallons of this are to come from corn. The rest is to come from other sources such as cellulose and sugar.
  

China, India to drive growth as credit crisis gains momentum
“For the first time, China and India are making the largest country-level contributions to world growth,” he said.
Emerging Asia is forecast to expand 9.2% this year and 8.3% in 2008; Africa is to grow 5.7% and 6.5%, and West Asia, supported by high oil prices and robust domestic demand, is projected to expand 5.9% in both 2007 and 2008.

World food price rises set to hit consumers
In Chicago wheat and rice prices for delivery in March 2008 have jumped to an all-time record, soyabean prices are at a 34-year high and corn prices at an 11-year peak.