How Low Can Commodities Go?

Commodities are in retreat (short-term anyway). The longer-term trends are still way up, but the next month or two could see a sizeable pullback if the charts today are any guide.

The problem is charts lie all the time. All it takes is one hot missile in the Middle East to change the whole ballgame. And longer-term, the global commodity supercycle is intact. Heck, the price of iron ore recently went up 97% year over year.

But I thought I'd share three charts with you to show you what I'm looking at. First, weekly oil ...

Now the CCI, a broad index of commodities ...

Bottom line: A pullback is a normal and necessary part of a bull market. And it could hand us the buying opportunity of the next 10 years. A year from now, I expect prices to be higher than they are now, and potentially much higher.

OTHER NEWS YOU CAN USE ...

Here's an interesting take on the energy crisis ...

Americans must diet to save their economy

Want to save the US economy? Go on a diet.

That's the message ecologists are trying to get across this week. They say the apparently looming energy crisis could be averted if US residents cut their calorie intake.

The average American consumes about 3747 kilocalories (kcal) per day compared to the 2000 to 2500 kcal per day recommended by the US Food and Drug Administration.

The 3747 kcal per day figure does not include any junk food consumed.

Producing those daily calories uses the equivalent to 2000 litres of oil per person each year. That accounts for about 19% of US total energy use.

US ECONOMY

Foreclosures Double in Second Quarter as U.S. Home Prices Fall

U.S. foreclosure filings more than doubled in the second quarter from a year earlier as falling home prices left borrowers owing more on mortgages than their properties were worth. One in every 171 households was foreclosed on, received a default notice or was warned of a pending auction. That was an increase of 121 percent from a year earlier and 14 percent from the first quarter, RealtyTrac Inc. said today in a statement.

National Australia Bank Writes Off 90% of Its Investments in U.S. residential mortgages

National Australia Bank Ltd. (NAB) said it has made an additional provision of A$830 million ($802 million) to its portfolio of collateralised debt obligations (CDO) of asset-backed securities. NAB said it now has provisions for nearly 90 percent of its total CDO portfolio.National Australia Bank makes A$830 mln provision to CDO portfolio.

XX Sean’s note – 90% of its CDO portfolio – which is the bad mortgage debt sold by American banks – is worthless? If NAB is right, we have a way to go in the U.S. mortgage crisis.

Middle class: 'On the edge'

Adjusted for inflation, median household income dropped by $1,175 between 2000 and 2007, said Elizabeth Warren, professor at Harvard Law School, in written testimony before the Joint Economic Committee.

At the same time, the average family is spending $4,655 more on basic expenses, such as gas, housing, food and health insurance. Gas alone costs $2,195 more for a family making the same commute in May 2008 as it did eight years earlier.

Durable-Goods Orders Rise

Orders for durable goods unexpectedly rose in June, while a barometer of capital spending by businesses increased, a sign of strength for the struggling manufacturing sector.

Billions needed to shore up nation's bridges

It would cost $9.4 billion a year for 20 years to eliminate all bridge deficiencies in the USA, according to the latest estimate, made in 2005, by the American Society of Civil Engineers.

Xx Sean’s note – click through on the link for an incredible map showing unsafe bridges around the country.

ENERGY

As oil price rose, exporters cut shipments

The world's top oil producers are currently proving unable to generate more barrels on demanding world markets, despite surging prices — a shift that defies traditional market logic and looks set to continue.

Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world's top oil exporters fell 2.5 percent in 2007, despite a 57 percent increase in prices, a trend that appears to hold true this year as well.

There are several reasons behind the net-export decline.

Small Car Sales Surge

Ford to retool 3 truck plants for small cars starting in December

Starting in December of this year, three truck plants will be retooled so that they can build cars instead. In addition six new models will be coming over from the European lineup and Mercury will live on. Like other automakers Ford will be consolidating production of large trucks into fewer plants..... The Michigan plant will retool to build to build a vehicle based on the European Focus platform. As previously announced the Cuautitlan Assembly Plant in Mexico will shift from building F-series pickups to the new Fiesta at the end of next year. A second plant in Louisville that currently builds Explorers will switch over to building Focus based vehicles as well.

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