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One Minute Macro Update
US: Futures higher again in the early morning as a slew of positive data is anticipated for the upcoming releases. Today sees Factory Orders, FOMC Minutes, Consumer Confidence and Vehicle Sales. Market sentiment seems to be trending towards fundamental doubt, however the anticipation of positive prints for December unemployment and 4Q10 GDP have market participants not wanting to be on the sidelines for a January rally. Yesterday’s ISM was positive news as the market rallied on the strongest numbers since April 2010. Treasuries continue to sell off. We still maintain that the front end is oversold, but along with most market participants, we would not want to attempt to catch a falling knife. The selloff is more driven by fiscal issues within the US than expectations of a broad recovery, which should serve to anchor Fed Funds expectations for the year.
Europe: EURIBOR-OIS has fallen back below 40bp as EURIBOR drops below 100bp and SOVXWE trades back towards 200bp. We still believe the European periphery situation will continue to deteriorate and will eventually overtake the bullish tone the market has adopted over the past few weeks. UK December Manufacturing PMI 58.3 v 57.2E as M4 growth printed at -0.8% MoM v +0.7% prior. YoY -1.4% v -0.8% prior. The BOE has reportedly been targeting 5% M4 growth to avert recession. German employment figures disappointed, further illustrating the divergence between commodity inflation and employment/wage price inflation (though we note that December weather may have been a factor). Debt rolls in the Euro region are gathering attention and we note that planned debt rolls for 2011 are significantly less than upcoming maturities, putting more emphasis on fiscal reform and economic growth to fill the gap.
Asia: Japan is seeking to form a military pact with South Korea and Japanese Prime Minister Kan has put tax reform debates on the near term agenda, with social security reform on the table. AUD manufacturing (AiG Performance of Mfg Index) continues to decline as commodity prices rise.
From Brian Yelvington of Knight Capital
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Asia, Oz, floods, commodities impact.
That is the story of the month already. Everything will be impacted. Australia is the largest commodity continent masquerading as a country.
Someone posted on another recent thread about how out-bound shipped goods have fallen off a cliff due to the flooding. Rail and road equally impacted.
ORI
http://aadivaahan.wordpress.com
I read that in Queensland, 75% of the coal operations have been halted, and this area produces almost half the world's coking coal. Once upon a time, this would have led to a fall in the share price of same coal miners, but I suppose now we know commodities are only going to rise forever, it's positive, since any delay means it will be worth more when they start operations later...
MWQ, true. Coking coal has a direct impact on steel prices.
The math can get ugly pretty fast as they are saying minimum a week to ten days just to get to the people. Industry, flooded mines especially, are an absolute pain.
To SD's silver comment below. Who would have though Force Majure would play a part eh?
ORI
Almost all coal consumers stockpile 6-8 months of coal. The reason mostly has to do with strikes but it also allows aggregate mixing of different coal sources to achieve a predictable input feed.
SOZ, heavy duty cargo supply chains are inherently sluggish. If the down time exceeds it's elasticity, the consequences can be catastrophic.
It's all about how quickly they can get shipping again.
Meanwhile, a short term price spike is only to be expected. Because of the explosion in teh use of structural steel here in India, I'm sure a lot of Indian steel companies are sweating this.
ORI
Australia has one of the biggest silver mines ;)
This is perplexing to me..when is the commodity prices going to hit the USA hard...so far not to much..at least not reported....Wheat, corn. cotton, soy, coffee....all to the moon....only Nat Gas is down...oil slowly going up...???????
you are not looking very hard. That 16 ounce box for 2.99 is now 14.37 ounces but is still 2.99. That is how the CPI stays low. Guess you donw drive a car either. If all you are buying is Itunes, then maybe none of this is knocking on your door .....yet.
http://jessescrossroadscafe.blogspot.com/
.
1/3/2011
The area of flooding is larger than the state of Texas and about the size of France.
Now THAT's ugly.
This is looking very ugly.
lol...right on cue
at first, i thought that was the BDIY. which, btw is at its lowest print since 4/17/2009.
Average LA gas price now 3.31. When will you interview the CEO of conocophilips? Just 69 cents and you are history.
Am not junking you myself, merely wish to suggest a spread for the number of junks you will receive for posting it. I call 25 - 27, and will take the over.
This morning's slashing was of epic proportions. I sense an attempt to create a H&S in PMs. Real or not, it will scare the fuck out of the techies. Also noteworthy, is that this is across the board. PMs, oil, and even the DJIX took a bit of a tumble.
so lovely...but not enough...ideally sometime this year it's at 800-850...oh boy
cant wait to get my hands full then...
TO: RobotTrader
on Tue, 01/04/2011 - 08:42
takedown sidebars:
1)bloomberg reports carry trade losses = strong $ = weaker commodity prices
2) front runnng silver shorts get ready for nose candy party time
3)carlos slim buying silver = chaos in party time panic rooms
4)shorts go defcon3 on pm longs with 'nuke em till they glow' party favors
5) carlos slim piles on as silver short to get better entry price
6) chinese send carlos slim anna chapman blow-up ball-me doll with encrypted thank you note
7) gold/silver bitchez gorge on fractal mark downs
see.....it's simple physics. for every action there is an equal and opposite reaction.................
I cashed in a few gold coins 12/29 to buy a car and I didnt like the charts. The car deal fell thru. I think silver is now a buy in rather than gold. Any bets on what the bottom for this pull down will be. I would like to see $23 maybe?? 20%??