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Thursday, October 30, 2008

Dollar Chart and Global Economic Drama

Here's the chart you need to watch -- currencies are driving everything. Is the US dollar going to correct lower? It hasn't broken its recent rocket ride of an uptrend. Neither has crude oil, despite its rally yesterday ...

Treasury, FDIC Crafting Plan to Rework Millions of Mortgages Officials with the Treasury and the Federal Deposit Insurance Corp. are crafting a plan under which the government would guarantee the mortgages of as many as 3 million homeowners now struggling to avoid foreclosure, according to three sources familiar with the discussions.
It would cost between $40 billion and $50 billion, sources said. The program is being discussed as members of Congress are voicing frustrations that the $700 billion rescue program thusfar has been aimed at helping banks, but not homeowners.

IMF Creates $100 Billion Fund to Aid Crisis Fight The International Monetary Fund will offer as much as $100 billion in a new kind of loan to countries that are battered by the financial crisis ... The new three-month loans, aimed at economies the IMF judges to be troubled but basically sound, wouldn't require countries to make the often severe changes in their policies that the IMF has demanded for decades.
The Shipping News Suggests World Economy Is Toast
It is now almost 90 percent cheaper to ship goods over the oceans than it was at the beginning of the year. And because the huge vessels known as capesize ships can't currently charge much more than their daily operating cost of about $6,000 per day, their
captains have slowed down to economize on fuel and save money, to about 8.68 knots from 10.33 knots in July, according to data compiled by Bloomberg.

U.S. Economy Shrank 0.3% in the Third Quarter as Consumer Spending Dropped The economy suffered its biggest decline since 2001 in the third quarter, ushering in what may be the worst recession in a quarter century and boosting the chances of Barack Obama and his fellow Democrats in next week's elections.

XX Sean's note -- the good news is this is less of a drop than was expected.

Is the "Commodities as Anti-Dollar" Trade Back? One reason for the sudden enthusiasm for commodities is that, as in the frenzied days of last spring and early summer, hard assets can serve as an anti-dollar trade. And the dollar is looking pretty richly valued right now.
Australian Dollar May Drop Below 40 U.S. Cents in 2009, State Street Says The Australian dollar may fall to a record low next year, possibly dipping below 40 U.S. cents for the first time, as slowing growth in emerging markets cools demand for the raw materials exported by the nation.


Barrick Gold Third-Quarter Net Income Falls to $254 Million on Writedowns Barrick Gold Corp., the world's largest gold producer, said third-quarter profit fell 26 percent after it wrote down the value of investments in companies including Highland Gold Mining Ltd.

Sino Gold Pours First Gold at White Mountain. Chief executive Jake Klein said the first gold pour is two months ahead of schedule and comes only 14 months after construction commenced and four years after the ore body was discovered.
In other news, you can listen to my most recent interview (from yesterday) here:


These two headlines are on Bloomberg at the same time ...

Crude Oil Rises Above $70 as Interest Rate Cuts May Spur Economic Recovery Crude oil advanced on speculation interest rate cuts in the U.S. and China may spur a global economic recovery and increase demand for fuels.

Crude Oil Declines Amid Skepticism Interest-Rate Cuts Will Bolster Demand Crude oil fell amid skepticism that interest rate cuts will be sufficient to bolster the global economy and increase fuel demand.
Check out my new gold and energy blog at