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Wednesday, January 07, 2009

What I'm Reading Today

No sooner do I say that gold may go lower (and the U.S. dollar higher) than gold ramps up again and the greenback stumbles badly. Sigh. Well, my longer-term (and bigger) bets are on the right side.

Here is news I'm reading ...

Dollar Falls From Three-Week High Versus Euro as ADP Says Job Cuts Rose The dollar fell from a more-than three-week high against the euro after a private report showed U.S. job market deteriorated last month, reinforcing expectations for a long recession.

XX Sean's note -- does the ADP news surprise anybody? Yes, the loss of 693,000 jobs was higher than analysts' expectations of a loss of 495,000 jobs. But everyone I talked to thought the real number would be higher than estimates. So again, who is surprised?

Oil Traders Seek Another 10 Supertankers for Storage
Frontline Ltd., the world’s biggest owner of supertankers, said oil traders want to charter as many as 10 vessels to stockpile crude to take advantage of higher prices later in the year. About 25 supertankers were already hired for storage and there are enquiries for 5 to 10 more, Jens Martin Jensen, Singapore-based interim chief executive officer of the company’s management unit, said by phone today.

Sean's note: Note the relevance of this to my column today, "Gold and Oil Short-Term Trends".

Here Comes the Commodity Index Rebalancing
I consider these contra-indicated: In a time of massive Fed credit creation and Treasury money printing, they oddly want less exposure to Gold. And with the worldwide recession getting worse, they want more exposure to Oil. Both of these are poorly timed macro-trades.

December auto sales "could have been worse"
On a seasonally adjusted basis, U.S. light vehicle sales remained deeply depressed in December. But at least things don't seem to be any worse than they had been the previous month.
Data source:

XX Sean's note: Gasoline prices are starting to go higher again, just in time to torpedo a potential auto recovery. It's like pistol-whipping a blind kid.

Robert Reich: The Need and the Size of the Stimulus Plan

In my judgment, this will require a stimulus of about 6.5 percent of gross domestic product, or a total of some $900 billion, spread over two years. That’s my estimate for the shortfall in private demand. But the federal government should stand ready to spend larger sums if necessary to get the economy back on track toward full capacity. The danger is not that the government will do too much; the danger is that it will do too little, too late.
Without such action, I estimate that another 3 million jobs will be lost in 2009, unemployment will rise to 10 percent of the workforce by the end of this year, and under-employment – including people working part-time who would rather be working full time, and those too discouraged even to look for work – will reach 15 percent.

Sean's note: The best quote from Reich in this column: "The goal should be not to save meaningless jobs but to create meaningful ones."

More Bad News Out of China, Including Capital Flight
China faces a threat of "abnormal" cross-border capital flow because of global financial tumult, the country's foreign exchange regulator said Tuesday...More money flowing out of the border could increase the risk of liquidity strain in the country, which is especially dangerous amid the global financial crisis...China's foreign exchange reserves had fallen for the first time since December 2003, Cai Qiusheng, a SAFE official, told a conference last month. He didn't give specific data of when that happened or by how much.

Copper Gains to 1-Month High in London on China, Obama Stimulus
Copper jumped to a one-month high in London on speculation China, the world’s largest user of the metal, will increase purchases this month as U.S. President-elect Barack Obama’s stimulus plan revives demand. Industrial metals including copper have advanced 9.1 percent this year, the best annual start since at least 2001, according to the London Metal Exchange.

The boss of Satyam, India's fourth-biggest software firm, has resigned after revealing financial irregularities in the firm's accounts.
"What started as a marginal gap between actual operating profits and the one reflected in the books of accounts continued to grow over the years," said Mr Ramalinga's statement, which was sent to the stock exchange. "It was like riding a tiger, not knowing how to get off without being eaten," he said.

Alcoa to Eliminate 15,000 Positions
Acknowledging that earlier cost-cutting moves are insufficient due to the sustained economic downturn, aluminum maker Alcoa Inc. announced deeper work-force cuts, more plant closures and a 50% reduction in capital expenditures.
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