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Monday, December 22, 2008

Monday Morning Charts and News

Here is a chart I'm watching today ...
As the euro-US dollar goes, so goes gold (at least recently)

Here is what I'm reading today ...


Stock Investors Lose Faith, Pull Out Record Amounts
One of the hallmarks of the long market downturns in the 1930s and the 1970s has returned: Rank-and-file investors are losing faith in stocks.
Investors pulled a record $72 billion from stock funds overall in October alone, according to the Investment Company Institute.

AP study finds $1.6B went to bailed-out bank execs
Banks that have their hands out in Washington this year were handing out multimillion-dollar rewards to their executives last year.

Is the Medicine Worse Than the Illness?
Barely nudging Mr. Madoff out of the top of the news was the Federal Reserve's announcement last Tuesday that it intends to debase its own paper money. , the Fed pledged to print dollars in unlimited volume and to trim its funds rate, if necessary, all the way to zero. Nor would it rest on its laurels even at an interest rate low enough to drive the creditor class back to work. It would, on the contrary, "continue to consider ways of using its balance sheet to further support credit markets and economic activity." The Fed's declaration of inflationary intent knocked the dollar for a loop against gold and foreign currencies. In many
different languages and from many time zones came the question, "Tell me, again, now that the dollar yields so little, why do we own it?"

Actually -- There Is A Credit Crunch
(XX Sean's note -- good charts at this link)

1.) The latest recession is the only recession where total credit outstanding has leveled off for an extended period.

2.) In order for the US economy to grow it must have a continual supply of new credit. A leveling off is just as hazardous as a decline.

Developers Ask U.S. for Bailout as Massive Debt Looms
With a record amount of commercial real-estate debt coming due, some of the country's biggest property developers have become the latest to go hat-in-hand to the government for assistance. The Real Estate Roundtable, a major industry trade group, predicts that more than $400 billion of commercial mortgages will come due through the end of 2009. Foresight Analytics estimates that $160 billion of commercial mortgages will mature next year.


As Oil Sinks, Producers Reprioritize Investments
A survey by Barclays Capital found 2009 capital budgets were 12% lower than 2008 spending plans, and some believe they might head lower. Budgets in the
U.S. and Canada are being cut the most, as projects in the high-cost oil-sands and unconventional natural-gas fields now make less economic sense ... A report by Cambridge Energy highlighted the danger of investment stagnating. It said the oil industry will need to spend more than $150 billion a year on new oil production over the next few years to generate adequate supplies for future demand.

Is the U.S. Rig Count about to Enter Freefall Territory?
Recently, the view began to target the potential for a 600-rig drop during the seasonally weak early months of 2009. Last week the prospect of a 700-800 rig drop emerged as a possibility and as that view began to gain some traction, the oilfield service stocks began to dive.

Shadowed by $200 oil

No one believes that $40 oil is going to last, and they’re willing to bet that as the economy rebounds, so will demand.

OPEC's President Vows to Cut Output until Prices Stabilize
The Organization of Petroleum Exporting Countries' president vowed Friday to cut production to boost sagging prices, setting it on a possible collision course with consumer countries relieved at crude's slump from record highs.


China Faces Unrest as Economy Falters
The government appears willing to tolerate some levels of worker unrest -- but only as long as the actions don't take on the overtones of a political protest. In Chaozhou, after the second strike, an open letter from the government spelling out its concessions said, "We again appeal for all the taxi drivers to express your demands and pursuits in a rational, calm, legal and reasonable way."

China Cuts Key Rates
China said it will cut its benchmark deposit and lending rates by 0.27 percentage points from Tuesday as part of its efforts to further ease monetary conditions.

Chinese Carriers Make Big 3G Push
China's wireless carriers will invest $40 billion in faster "3G" networks, which could boost the nation's telecom-equipment industry.

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