News You Can Use for Monday

Gold

Saudi Arabia, Egypt drive Dubai gold sales up 34 per cent in June "We are seeing a very strong demand from the Middle East and many expatriates are buying large amounts of gold for friends and families back home," said Tawhid Abdullah, managing director of the Dubai Gold and Jewelry Group. "We have seen a 34 per cent jump in sales value in June and I expect to see a 40 per cent increase in sales value in July."

India and China Expected to Equal U.S. Jewelry Market NEW DELHI (CommodityOnline.com) -- India and China are together expected to equal world's largest jewelry market, the United States, by 2015 when the global gems and jewelry trade is expected to touch $230 billion, states a new industry report.

Interest Rates

Garbage In, Carnage Out Interest rates on $800 billion in subprime loans will reset in 2007-2009, further endangering residential mortgage-backed securities. Originally constructed with premium AAA mortgage bonds on top, 'mezzanine' collateralized debt obligations in the middle, and high-risk, high-interest BBB and BBB- bonds on bottom, debt-rating agencies like Moody's and S&P then sugar-coated mezzanine CDOs by rating 80% of them AAA, assuming geographical loan diversification and varying 'slices' of debt values would protect the structure. Torrential-growth CDO² (BBB-only securities), twice removed from the loan collateral, are teetering -- just 5% in loan losses could render them worthless. Moody's forecasts 2006 subprime mortgage losses of between 6%-8%; some foresee 10%. After Bear Stearns (BSC), and UK's Caliber Global Investment subprime trouble, Canada's CIBC now admits it owns $330 million of subprime securities. Debt insurers Ambac (ABK) and MBIA (MBI) own almost $1b and $800m respectively. Unlike the $150b U.S. Savings & Loan bailout, subprime infection is global: German state banks, Asian investment houses, hedge funds and Wall Street firms are among subprime holders. Now debt-backed takeovers are losing investor appeal, and the ABX subprime index has lost almost 50% since January. Investors will likely pursue debt-rating agencies for misleading ratings. Barron's says subprime losses could surpass $100b.

U.S. Economy's Rebound May Be Bumpier Than Fed Expects as Credit Tightens What started as a financing squeeze in the subprime- mortgage market now threatens other parts of the economy. Borrowing costs for companies are climbing as banks and investors demand more for their money. Consumers feel the pinch from rising interest rates and sagging house prices. As a result, the economy may struggle to achieve the 2-1/2 to 3 percent growth rate that most forecasters inside and outside the Fed have penciled in for the second half of the year. Instead, economists at International Strategy & Investment Group, UBS AG and Commerzbank AG see growth below 2 percent as consumer spending slows and business investment fails to pick up under the weight of tougher financing conditions.

Bear Market Tightens Grip on Treasuries as Jobs, Inflation Trump Housing That's the conclusion of economists at Lehman Brothers Holdings Inc., Morgan Stanley and RBS Greenwich Capital. They estimate 10-year government notes will return 1.28 percent this year, not even enough to cover inflation. The performance would be the worst since 1999, when they lost 8.25 percent, Merrill Lynch & Co. index data show.

Uranium

Nuclear Cost Proves Prohibitive for Utilities as TVA Drives U.S. Revival President George W. Bush plunged into the cotton fields of northern Alabama last month to fete the restart of the Tennessee Valley Authority's oldest, most troubled nuclear reactor after a $1.8 billion renovation. Far more than safety and environmental concerns, the biggest hurdle to fulfilling Bush's ambition to build the equivalent of three new nuclear plants a year by 2015 is money. U.S. utilities will have to invest about $350 billion by 2025 to satisfy the country's growing appetite for electricity, according to Cambridge Energy Research Associates, a Cambridge, Massachusetts, consultant.

Geopolitical

Pakistan's Red Mosque Siege Is Organized by Terrorists, Government Says Terrorists are organizing the siege at Islamabad's Red Mosque and are preventing Deputy Chief Cleric Abdul Rashid Ghazi from surrendering, Pakistan's Minister for Religious Affairs Muhammad Ijaz ul Haq said.

Canada

Dodge May Raise Rate to 4.5 Percent, Ignoring Pleas of Canadian Exporters Bank of Canada Governor David Dodge may raise interest rates for the first time since May 2006, as exporters and unions warn an increase will send the currency to parity with the U.S. dollar and cost jobs.

China

China Shares Surge as Government Limits Stake Sales: World's Biggest Mover China's stocks rose, completing the biggest two-day gain in 11 weeks, after the government said it will limit sales of state-controlled shares as holding periods expire. Citic Securities Co. and China Vanke Co. advanced.

Energy

Russian Sales of Foreign Cars Surge 70 Percent, Led by Ford's Focus Sedan Russians bought 70 percent more foreign cars in the first half as rising incomes fueled demand for vehicles from automakers including Ford Motor Co., whose sales more than doubled.

Crude Oil Falls From Near a 10-Month High as U.S. Refineries Raise Output Crude oil fell from near a 10-month high in New York as some analysts and traders speculated recent gains were unjustified while U.S. refineries were increasing their output of fuel.

Ethanol Poised to Recover as Bumper Corn Crop Lowers Cost; ADM Shares Gain The steepest decline in ethanol since 2001 may be ending, buoying profits at Archer Daniels Midland Co., VeraSun Energy Corp. and Aventine Renewable Energy Inc.

Check out my new gold and energy blog at MoneyAndMarkets.com