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Commodities Rise Most in 24 Years; Goldman Sees Gain (Update4)

June 1 (Bloomberg) -- Manufacturers preparing for an economic rebound are rebuilding inventories of everything from benzene to plywood, sparking a commodities rally that Goldman Sachs Group Inc. says will produce 19 percent returns in a year.

The Journal of Commerce index that tracks prices of 18 industrial materials gained 9.5 percent in May, the most in a month since the measure began in 1985. Goldman’s forecast on May 8 would beat the firm’s estimate for a 4 percent rise in the Standard & Poor’s 500 Index this year.

Aurubis AG, the top manufacturer of copper-wire rods for cars, said last week that demand improved since April. Huntsman Corp., the biggest maker of epoxy adhesives, said May 8 that second-quarter results will benefit from improved sales to customers who have depleted stockpiles. Dow Chemical Co., the largest U.S. chemical maker, said its plants operated at 70 percent of capacity in April, up from 45 percent in December.

“The distribution chain will generate this giant sucking sound of demand,” Alcoa Inc. Chief Executive Officer Klaus Kleinfeld said at an investor conference May 29 in New York. The largest U.S. aluminum producer said metal distributors have “seen some green shoots” in orders and are concerned they won’t be able to satisfy clients as the economy recovers because inventories are near zero.

While the U.S. economy contracted 6.3 percent in the fourth quarter and probably will shrink 2.8 percent this year, based on the median estimates in a Bloomberg survey of 61 economists, commodity prices show that investors and corporate purchasing agents anticipate a rebound will begin later this year.

Commodity Rally

The Journal of Commerce Industrial Price Commodity Smoothed Price index improved to an annual rate of minus 23.21 today, compared with a record of minus 69.9 in December. While the gauge of materials from tallow to steel indicates demand is contracting, the narrowing gap suggests manufacturing is bottoming.

Among exchange-traded commodities, copper has rallied 66 percent this year, touching a seven-month high of $5,091 a metric ton today on the London Metal Exchange. LME stockpiles have dropped 42 percent since February to a five-month low of 311,975 tons. Crude oil surged 53 percent this year, touching $68.68 a barrel today, the highest since November. Cotton is up 18 percent.

“When you see copper and commodities doing well, then it’s a sign that there are meaningful parts of the global economy that are stronger,” said Evan Smith, co-manager of the San Antonio-based U.S. Global Investors Global Resources Fund, which is up 37 percent this year. “We like the outlook for commodities right now.”

Financial Crisis

Prices are showing signs of a rebound less than a year after the Reuters/Jefferies CRB Index of 19 commodities began its plunge from a July 3 record, dropping as much as 58 percent by Feb. 24 as the global economy entered its first recession since the Great Depression.

A freeze in credit markets that started with the collapse of the U.S. property market in 2007 halted growth, leading the world’s biggest financial institutions to report more than $1.48 trillion of writedowns and credit losses. The contraction prompted central banks and governments to cut interest rates close to zero and pledge more than $13 trillion for stimulus programs and rescue measures.

Signs of recovery are appearing. The CRB index, after dropping on Feb. 24 to the lowest level since June 2002, rose 14 percent in May, the biggest monthly rally in 34 years. The dollar slumped last week to a five-month low against a basket of six major currencies, bolstering demand for energy, metals and crops as a hedge against inflation.

Restarting Engine

The CRB rose 3.1 percent today, capping the biggest gain since April 2 and touching the highest level since Nov. 11.

“The global industrial engine is restarting and that will mean these industrial commodity prices will continue to rise,” said Lakshman Achuthan, the New York economist who predicted in November that the world was headed for its worst recession since at least 1981. “There are very clear signs that demand for commodities is improving.”

The rally boosted mining and metals companies. Phoenix- based Freeport-McMoRan Copper & Gold Inc. rose 28 percent in New York trading in May, the sixth straight monthly gain and the most in more than eight years. Pittsburgh-based U.S. Steel Corp. also gained 28 percent and reached a three-month high.

Rebound Skeptics

A sustainable recovery would be a surprise to analysts at Charlotte-based Bank of America Corp. In a May 15 report, the bank dismissed proponents of an economic rebound as “overly optimistic” and said the “protracted credit cycle” may last through 2016.

The U.S. economy has lost 5.7 million jobs since the recession began in December 2007, and the jobless rate rose to 8.9 percent in April, the highest since September 1983. Unemployment probably rose to 9.1 percent in May, according to the median estimate of 60 economists in a Bloomberg News survey ahead of the Labor Department’s June 5 report.

Mortgage delinquencies and foreclosures climbed to records in the first quarter, and U.S. builders broke ground on the fewest homes on record in April.

The slumping auto and housing industries will weigh on U.S. growth and limit consumption of raw materials, said Stuart Flerlage, who helps manage more than $600 million at NuWave Investment Corp. in New York. A typical home uses about 439 pounds (199 kilograms) of copper and a car uses about 50 pounds.

“We don’t really buy into the theory that the recovery is coming, because a lot of parts of the economy are still weak,” Flerlage said.

Dwindling Inventories

Even a sluggish recovery may help commodities because manufacturers have drawn down inventories.

U.S. inventories of durable goods, from plastics and fuel to airplanes and tractors, dropped for four straight months through April, the Commerce Department said May 28. Stockpiles of iron, aluminum and steel slid for seven straight months and are down 14.2 percent from April 2008, the department said. Supplies of fabricated products such as kitchen utensils, cans and plumbing fixtures fell 5.9 percent.

Stores of gasoline have fallen for five straight weeks to 203.4 million barrels, according to the U.S. Energy Department, a sign that consumers are using more fuel. The Organization of Petroleum Exporting Countries decided last week to keep output quotas unchanged, “seeing a light at the end of the tunnel” for demand, Secretary General Abdalla El-Badri said on May 28.

Al-Naimi’s View

Ali al-Naimi, the oil minister for Saudi Arabia, the world’s largest producer, said last week that energy demand is improving and predicted crude will reach $75 this year.

Jeffrey Currie, Goldman’s London-based head of commodities research, said in the May 8 report that a jump in agriculture and energy prices will help the Standard & Poor’s GSCI Enhanced Commodity Index return about 19 percent over the next year. The measure jumped about 17 percent last month.

Equities won’t do as well, according to David Kostin, Goldman’s chief U.S. stock strategist. In a Feb. 26 report, he predicted the S&P 500 will advance to 940 this year, down from his earlier forecast of 1,100. The index closed at 903.25 on Dec. 31 and today rose 2.6 percent to 942.87 as of 5 p.m. in New York. A Goldman spokeswoman said May 29 that Kostin hasn’t updated his forecast since February.

Currie said copper, zinc and soybeans will have the biggest gains in coming months because they’re tied to rising demand in China. Energy prices, hurt by slowing economies in Europe and the U.S., will get a boost once growth resumes, he said.

Chinese Demand

Commodity shipping rates are rallying, suggesting world trade is starting to pick up. The Baltic Dry Index, a measure of costs to move bulk goods, jumped to an eight-month high on May 29 after falling 94 percent in the second half of 2008, as China increased purchases of iron ore. Imports of the steelmaking ingredient surged 33 percent in April, setting a record for a third month. China is the world’s biggest steelmaker.

Demand is also poised to gain in India as the government increases investments in ports, roads and bridges, Steel Secretary Pramod Rastogi said May 18. Steel Authority of India Ltd., the nation’s biggest state-run maker, said sales would increase 5 percent in May as demand rose.

“What is unshakeable is our belief that China and India and other emerging economies will be the key engines of any return to world growth and commodity demand growth,” said Sam Walsh, an executive at London-based Rio Tinto Group, the world’s third-largest mining company.

Stimulus Spending

China is spending 4 trillion yuan ($586 billion) to revive what has been the world’s fastest-growing major economy. The expansion will accelerate to 8.3 percent in the third quarter and 8.9 percent in the fourth, according to the median estimates of eight economists surveyed by Bloomberg.

The nation is also buying commodities in part to shift its sovereign wealth amid concern that the value of dollar assets may decline, the Royal Bank of Canada has said. Oil imports and stockpiling may be the reason oil rose above $60, according to Sanford C. Bernstein & Co. Imports may have peaked in March and April, while tanker arrivals into China’s Strategic Petroleum Reserve ports have increased by about 400,000 barrels a day, Bernstein said in a research note May 22.

China’s State Reserve Bureau contracted to take 300,000 tons to 400,000 tons of refined copper into its stockpiles from overseas this year, according to Macquarie Group Ltd.

China Auto Sales

“The whole industry rebounded in the first half of this year because demand for automobiles in China remained strong despite the economic slowdown elsewhere,” said Zhu Yijun, an auto industry researcher at the state-backed Shanghai Information Center. “Many consumers in China are only starting to buy vehicles for the first time. So the outlook remains more bullish for the Chinese market than in other countries.”

Moline, Illinois-based Deere & Co., the world’s largest maker of farm equipment, reported second-quarter profit that topped analysts’ estimates as sales of machines remained “strong.” Caterpillar Inc. Chief Executive Officer Jim Owens said in May the residential real estate market is “finding a bottom” and the “recovery potential in this sector is very significant.” Caterpillar is based in Peoria, Illinois.

Investors have begun putting money back into raw materials. Hedge funds are making the biggest bet in 10 months that prices of U.S. commodity futures will rise.

Mutual-Fund Investment

Commodity mutual funds received $303 million in new money the week ended May 27, according to EPFR Global. Raw-materials funds have attracted $5.2 billion this year, lifting total assets under management to $34.3 billion, the group said. Energy funds have lured $1.4 billion, increasing total assets to $20.3 billion.

U.S. Global’s Smith said the fund has expanded its holdings of mining and energy stocks during the past few months on expectations rising demand may push oil to $75 by October. Copper in New York may jump 12 percent in the next 90 days to $2.40 a pound, said Michael K. Smith, the president of T&K Futures & Options in Port St. Lucie, Florida.

“A lot of money is coming back into the commodity markets now on the view that things are going to turn around economically and on the idea that inflation will become a threat again,” he said.

http://www.bloomberg.com/apps/news?pid= ... e1qarOz5qU

Energy prices slump on surplus of oil in storage

Weeklong energy rally stumbles with latest report on a big surplus in oil

SIOUX FALLS, S.D. (AP) -- Oil prices slumped Wednesday when a government report on unused crude in
storage suggested the monthlong rally in energy prices may have been premature.
Crude and gasoline prices tumbled through most of the year as storage facilities filled up. Heavy industry and individual consumers had pulled back sharply on energy spending.

After rising for seven straight days and threatening to break the $70 barrier, benchmark crude for July delivery tumbled more
than 4 percent, or $2.80 to $65.75 a barrel on the New York Mercantile Exchange.

The catalyst was a report from the Energy Department's Energy Information Administration, which said
crude in storage rose by 2.9 million barrels to 366 million barrels, which is 20.3 percent above year-ago levels.
Analysts had expected storage levels to fall as they had in the previous three weeks. Huge inventory levels earlier in the year had pushed energy prices to five-year lows.

The report sent a jolt through the market, which has been flooded in recent weeks by money from investors who have capitalized on a weak dollar.
Because crude futures are priced in the U.S. currency, oil is relatively cheap.

But that strategy can go only so far if no one is buying oil.

http://finance.yahoo.com/news/Energy-pr ... 27668.html

U.S. Economy: Services Shrink, Job Losses Mount (Update1)

By Shobhana Chandra and Courtney Schlisserman

June 3 (Bloomberg) -- Service industries in the U.S. shrank at a slower pace in May, while job losses mounted, indicating that any economic recovery will be slow to develop.

The Institute for Supply Managements index of non- manufacturing businesses, which make up almost 90 percent of the economy, climbed less than forecast to 44 from 43.7 in April, the Tempe, Arizona-based group reported today. ADP Employer Services estimated companies cut 532,000 workers from payrolls.

These reports throw cold water on the notion that this aircraft carrier that is the economy will turn on a dime, said Tim Quinlan, an economist at Wachovia Corp. in Charlotte, North Carolina. We are heading into a long, gradual recovery that will finally culminate in positive economic growth at the end of this year.

Federal Reserve Chairman Ben S. Bernanke today projected the economy will suffer sizable job losses in coming months that will restrain consumer spending. Stocks retreated for the first time in five days because of concern that increases in unemployment will hobble the early stages of any expansion later this year.

The ISM index was projected to increase to 45, according to the median forecast in a Bloomberg News survey of 70 economists. Estimates ranged from 40.5 to 47. Readings less than 50 signal contraction.

http://www.bloomberg.com/apps/news?pid= ... W7BSNZEoRU

Goldman Raises Year-End Crude Forecast by 31% to $85 (Update3)

By Alexander Kwiatkowski and Stephen Voss

June 4 (Bloomberg) -- Goldman Sachs Group Inc. raised its forecast for U.S. benchmark oil by 31 percent to $85 a barrel for the end of 2009 and predicted further gains next year as demand recovers and supplies shrink.

“As the financial crisis eases, an energy shortage lies ahead,” Goldman analysts Jeffrey Currie in London and David Greely in New York said in a report e-mailed today. The bank set a 12-month price target of $90 a barrel for West Texas Intermediate crude, up from $70, and introduced a forecast of $95 for the end of 2010.

Oil posted its biggest monthly gain in a decade in May, and this month traded above $69 a barrel for the first time since November on speculation a global economic recovery will trigger a rebound in demand. A decline in the value of the dollar has also drawn investors to crude and other commodities as an inflation hedge.

The rally has been driven by the “unwinding of pricing dislocations caused by the credit crisis,” Goldman said in the report dated June 3. It’s a “prologue” to a price recovery in the second half of the year as the global economy stabilizes and crude inventories decline, the bank said.

Crude oil for July delivery traded at $66.87 a barrel on the New York Mercantile Exchange as of 9:05 a.m. London time. Goldman had expected oil to dip during the middle of this year, then rally in later months.

Risks Reduced

“With the risk of further pricing dislocations reduced, we are omitting the prior anticipated price pullback from our forecasts and have raised our 3-month ahead price target to $75 a barrel from $52 a barrel,” Goldman said.

Easing credit markets have cut financing costs on crude storage, strengthening near-term prices relative to longer-term contracts, or narrowing the so-called contango, according to Goldman. The contango is likely to continue shrinking this year as production cuts by the Organization of Petroleum Exporting Countries reduce crude inventories, the bank said.

“The key to the anticipated recovery in supply-demand fundamentals will be the willingness of OPEC, in particular Saudi Arabia, to keep production reduced and draw inventories back to 10-year average levels,” according to the report.

Closed Selling

Goldman closed its trading recommendation to sell WTI July crude futures on Nymex, which was put in place on April 17 when the contract cost $54.66. The trade lost $11.56 a barrel, according to the report.

The bank recommends buying crude options for the right to buy oil at $85 by June 2010, while selling a contract for the right to buy at $100 a barrel in the same period.

Goldman, the fifth-largest bank in the U.S. by assets, said it expects there to be an energy shortfall by the second half of next year as spare production capacity among OPEC members is unable to meet rising demand as non-OPEC supplies wane.

“Even a full return of spare OPEC production will be insufficient to avoid a sharp decline in inventories as non-OPEC production continues to decline amidst rising demand,” Goldman said in the report.

Non-OPEC supply may shrink by 400,000 barrels a day in 2009 and by 910,000 barrels a day in 2010, Goldman said. The International Energy Agency expects a contraction of 300,000 barrels a day this year.

Goldman’s New York-based energy equities research team, led by analyst Arjun Murti in March 2005 correctly predicted a “super spike” in prices. In May last year, Murti said oil may rise to between $150 and $200 a barrel within two years. The team revised its forecast after prices then slumped from a record $147.27 in July.

http://www.bloomberg.com/apps/news?pid= ... fer=canada

Wal-Mart: We're hiring 22,000
World's biggest retailer expects to add more than 1,000 jobs at new stores in several states - including California, Florida and Michigan - this year.

By Parija B. Kavilanz, CNNMoney.com senior writer
Last Updated: June 4, 2009: 7:43 AM ET



NEW YORK (CNNMoney.com) -- Wal-Mart Stores Inc. said Thursday that it expects to hire more than 22,000 people to staff its new or expanded domestic stores this year.

"During this difficult economic time, we're proud to be able to create quality jobs for thousands of Americans this year," Eduardo Castro-Wright, vice chairman of Wal-Mart U.S., said in a statement.

Wal-Mart (WMT, Fortune 500), the world's largest retailer, had previously announced it would open 142 to 157 stores new or expanded stores in 2009, which is fewer than the total number of its new or expanded stores in 2008. The company did not specify how many stores it opened last year.

Wal-Mart added 33,000 jobs in the United States last year, according to the annual report released in April.

The company said it will add 1,000 or more workers in each of 8 states: Arizona, California, Florida, Michigan, New Jersey, South Carolina, Utah and Virginia.

The retailer said the new hires will fill positions across its business units, including cashiers and sales associates, as well as pharmacists, human resource managers and customer service associates.

The discounter said benefits, including health plans that offer customized health coverage options, will be offered to its full and part-time workers.

Wal-Mart is the largest private-sector employer in the United States with a workforce of 1.45 million. Its total worldwide workforce is more than 2 million.

The announcement comes on the eve of the government's May report on national employment, which is expected to remain bleak. Economists surveyed by Briefing.com forecast that the unemployment rate will rise to a 25-year high of 9.2%, with 520,000 jobs lost last month.

http://money.cnn.com/2009/06/04/news/co ... /index.htm

Warren Buffett to CNBC: Economy Has "Fallen Off a Cliff"

Warren Buffett tells CNBC's Becky Quick the U.S. economy has "fallen off a cliff."
During a three-hour appearance on Squawk Box this morning (Monday), Buffett said economic developments have been very "close to the worst case" that he had imagined, although conditions would be far worse if the Federal Reserve hadn't stepped in last September.

Other highlights:

The economy "can't turn around on a dime" and a turnaround "won't happen fast."

Predicts unemployment rate in U.S. will go well above its current levels before the downturn ends

But, five years from now, the economy will be running fine.  The strength of the American system will pull it through, just as it has many times in the past.

Democrats and Republicans should work together and not try to take advantage of the economic situation to achieve partisan goals.

Inflation has the "potential" to be worse than the 1970s.

Most banks are in "pretty good shape" and can "earn their way out" of the current problems given the low cost of funds.  Banks, however, "need to get back to banking."

Extremely important that the government make clear depositors won't lose their money if banks fail.  Obama needs to make a "clear statement" in support of the banking system. (Slideshow: World's Safest Banks)

Berkshire is restricted from buying more American Express [AXP  25.25    0.77  (+3.15%)   ] stock, but that doesn't mean it is not a "hell of a buy" at $10 a share.

Wishes he had written the New York Times "Buy American" piece a few months later, but stands by the basic argument that you'll do better over a ten-year period with stocks that you will with Treasuries.  He said in the article he wasn't calling the bottom of the stock market, and he still isn't.

Buffett says derivatives are not "evil" and to be avoided at all costs, but they are "dangerous" and should be used very carefully.  He still expects to make money on the long-term "put option" equity derivative contracts Berkshire has written.  

Housing market could work through, or "sop up," its excess supply in as little as three years if new construction is reduced to a level below natural population growth

The U.S. economy was not a "house of cards" over the past ten years, but mistakes were made when it came to borrowing money.
Mark-to-market accounting should be retained, but regulators shouldn't use it so much to require insitutions to increase their reserves.

"Probably the uptick rule" is a good idea.

Mistake to "demonize" corporate executives for using private jets.  Having a jet has helped Berkshire make deals in the past.

Praises Ben Bernanke's leadership as Federal Reserve Chairman

http://www.cnbc.com/id/29592831/

Mobius Says Money Supply to ‘Explode,’ Lift Markets (Update3)

June 4 (Bloomberg) -- The money supply is set to “explode” worldwide and boost emerging-market stocks as central banks pump cash into the financial system to counter the global recession, Templeton Asset Management Ltd.’s Mark Mobius said.

“Everyone is scared of deflation, so they are printing money,” Mobius, who helps oversee about $20 billion of emerging-market assets as executive chairman of Templeton, said at a press briefing in London. “It’s beginning to flow out, with greater confidence, into emerging markets.”

The MSCI Emerging Markets Index, a 22-country benchmark for developing-nation equities, surged 37 percent this year as central banks led by the U.S. Federal Reserve reduced interest rates and purchased assets to revive economic growth. The European Central Bank and the Bank of England today kept their benchmark interest rates at the lowest levels on record.

The Fed said its M2 gauge of money supply, which includes all currency held by consumers and companies for spending, money held in checking accounts and travelers checks, savings and private holdings in money-market funds, rose at a 9 percent annual rate in the week ended May 18, above the target of 5 percent the Fed once set for maximum growth. The central bank no longer has a formal target.

Mobius, voted among the “Top Ten Money Managers of the 20th Century” by the Carson Group, said emerging-market equities will rise faster than developed-country stocks and that Templeton is buying shares in Russia. The nation’s benchmark RTS Index has jumped 75 percent this year, the second-best performing market worldwide after Peru.

Hedge Fund Bets

While the “longer-term trend is up” for emerging-market stocks, they may suffer a “correction” of as much as 20 percent in part because some hedge funds are selling shares in a bet they will decline, Mobius said.

“There has to be corrections along the way, that is the nature of the beast,” the 72-year-old investor said. “We continue to try to be as fully invested as possible in these markets.”

Commodities will gain and the dollar will weaken in the “longer term,” Mobius said. The Reuters/Jefferies CRB index has climbed 11 percent this year, rebounding from a 36 percent tumble in 2008. The dollar slid 2.2 percent against a basket of six major currencies this year.

Mobius said he may be investing in Iraq in a year and is looking to invest in Iran.

http://www.bloomberg.com/apps/news?pid= ... 2E1nHPIIAQ

New Oil Shock is "Inevitable"

By Paul Kedrosky · Tuesday, May 26, 2009


http://paul.kedrosky.com/archives/2009/ ... ock_i.html



Return of the Super Cycle?

http://www.financialsense.com/editorial ... /0519.html
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Consumer Credit in U.S. Falls Second-Most on Record (Update1)

By Vincent Del Giudice

June 5 (Bloomberg) -- Borrowing by U.S. consumers had the second-biggest drop on record in April as the jobless rate reached its highest in a quarter century and accessing loans remained difficult.

Consumer credit fell $15.7 billion, or 7.4 percent at an annual rate, to $2.52 trillion, according to a Federal Reserve report released today in Washington. Credit decreased by a record $16.6 billion in March, more than previously estimated.

Spending by consumers declined for a second consecutive month in April as the unemployment rate increased to 8.9 percent, a level not seen since 1983. The number of people collecting jobless benefits broke records for 17 weeks before the end of May, causing Americans to put off purchases out of fear they might lose their jobs or take longer to find new ones.

Consumers have retrenched in the face of rising unemployment and are paying down their debts and increasing their savings, said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. Those consumers who do want to spend are having their credit limits cut left and right by banks that are increasing their credit-risk checks.

Economists had forecast consumer credit would drop $6 billion in April, according to the median of 29 responses in a Bloomberg News survey. Projections ranged from a $9 billion drop to a gain of $1.5 billion. The Fed initially reported that consumer credit decreased by $11.1 billion in March.

http://www.bloomberg.com/apps/news?pid= ... Iewec5NTh4

Krugman Says No Signs of V-Shaped Economic Recovery (Update1)

By Dara Doyle and Louisa Nesbitt

June 5 (Bloomberg) -- Nobel Prize-winning economist Paul Krugman said the worlds economy is showing not a hint of a V-shaped recovery marked by a swift decline and revival.

The economy is stabilizing, not recovering, Krugman, an economics professor at Princeton University in New Jersey, said today at a conference in Dublin. Things are getting worse more slowly.

Data this month showed that the contraction in Europes manufacturing and service industries is easing and confidence in the economic outlook is rising. The U.S. lost fewer jobs in May than forecast, a report today showed. The International Monetary Fund says its forecast for global growth of 1.9 percent next year is based on the premise of a healthy financial system.

We have made the transition from sheer panic to chronic anxiety, Krugman said, adding hes has a hard time seeing what might drive a full economic recovery.

U.S. payrolls fell by 345,000 in May, the smallest decrease in eight months, after a revised 504,000 loss in April, the Labor Department said today in Washington.

The U.S. policy response to the economic crisis has been extraordinarily aggressive, Krugman said. Unfortunately, it hasnt been enough. The country will need some form of new taxes to bring down its deficit, he added.

Service industries in the U.S. shrank at a slower pace in May while job losses mounted, indicating that any economic recovery will be slow to develop.

The euro zone, like the United States, I fear, could be facing kind of a lost decade, Krugman said.

http://www.bloomberg.com/apps/news?pid= ... TifebEMcHE

LOSO เขียน:New Oil Shock is "Inevitable"

By Paul Kedrosky · Tuesday, May 26, 2009


http://paul.kedrosky.com/archives/2009/ ... ock_i.html



Return of the Super Cycle?

http://www.financialsense.com/editorial ... /0519.html
[img]
http://img23.imageshack.us/img23/217/20090605062912.png[/img]

Natural Gas – Sleeper of 2009 ???

http://www.financialsense.com/fsu/edito ... /0602.html

China Industry Output Beats Forecasts, Sales Up

By: Reuters | 12 Jun 2009 | 12:33 AM ET


China's factory output growth rebounded in May alongside stronger expansion in credit and consumer spending, bolstering evidence that the world's third-largest economy is on the path to recovery.


The figures, which round out a batch of monthly data that has mostly surprised on the upside, suggest that the government's huge stimulus spending and tax breaks to encourage purchases of everything from cars to home appliances are helping to offset continued weakness in exports.

The acceleration in industrial production growth, to 8.9 percent compared with 7.3 percent in April, beat economists' forecasts of a 7.5 percent rise but was in line with a figure reported by two Chinese newspapers earlier this week.

Retail sales grew by 15.2 percent in the year to May, also beating forecasts and up from 14.8 percent expansion in April.

Together with the rebound in new domestic-currency lending in May, to 664.5 billion yuan ($97.3 billion) compared with 592 billion yuan in April, the data paint a picture of an economy pulling up from a bottom.

"The worst is over for the Chinese economy," said Hao Daming, senior analyst with Galaxy Securities in Beijing.

"The pace of destocking in the past three months has been very rapid. Now China has almost reached the end of the destocking process."

Asian shares moved towards new highs for the year on Friday, buoyed in part by the stronger-than-expected data, which helped add to hopes that the worst is over for the global economy.
   
Property Investment Rebound

The stronger-than-expected production growth is due mainly to policy-driven investment growth, but other positive signs include a rebound in property investment in May, said Qing Wang with Morgan Stanley in Hong Kong.



The government has been frontloading a 4 trillion yuan ($585 billion) stimulus package focused on infrastructure investment, driving annual growth in fixed-asset investment in the first five months up to 32.9 percent.

The real estate sector, which accounts for almost a quarter of fixed investment, saw growth of 6.8 percent in the first five months, up sharply from 4.9 percent in the January-April period.

Exports and imports both fell in May from year-earlier levels for the seventh month in a row, but Wang said he expected to see some relief in external demand as well.

"We expect the economy to accelerate in the remainder of the year because currently we see policy-driven investment growth, but at the same time we expect that exports should have bottomed and will gradually improve," he said.

Bank credit continued to surge, with the stock of yuan loans at the end of May up 30.6 percent from a year earlier.

Banks have now extended a total of 5.84 trillion yuan of credit in the first five months of the year, well above the government's minimum target of 5 trillion yuan for the whole year.


   
Concern About Bad Loans

"Without window guidance from the regulator, new loans will continue to grow quickly, driven mainly by smaller lenders, while in earlier months, loans were mainly from big banks," said Lu Zhengwei, chief economist with Industrial Bank in Shanghai.

That has created some concern about the potential for a rebound in bad loans down the road.

But Liu Mingkang, head of the China Banking Regulatory Commission, said at a financial conference on Friday that banks remained sound, with their leverage ratios well-controlled.

http://www.cnbc.com/id/31279731

George Soros Says the Worst of the Global Crisis ‘Is Behind Us’

By Christopher Wellisz

June 21 (Bloomberg) -- Billionaire hedge fund manager George Soros said the worst of the global financial crisis is over, and called for new international regulations to maintain open markets.

“Definitely, the worst is behind us,” Hungarian-born Soros said in an interview yesterday with Polish television station TVN24.

He called the crisis the most serious in his lifetime, adding, “This is the end of an era. The question is what’s going to come out of it in the future.”

Without new international regulations, “globalization will fall apart,” possibly spawning a system of “state capitalism” like the one that exists in China, he said.

Soros, who recently returned from China, said the world’s third-largest economy is “growing in strength” because the country was relatively unaffected by the crisis.

http://www.bloomberg.com/apps/news?pid= ... v9_ayxahEs

20 Year  Opportunity !!!!

http://www.ciovaccocapital.com/sys-tmpl ... mmodities/

Dow Average May Decline Below 8,000 Level: Technical Analysis


By Maud van Gaal

June 22 (Bloomberg) -- The Dow Jones Industrial Average Index may breach the 8,000 level if it doesnt recover from a drop below several support lines, according to a technical analyst at Mizuho Securities Co.

The 30-stock Dow industrials slid 3 percent last week to 8,539.73, the first decline in more than a month. That compares with the 25-day moving average of 8,564.55 and the 200-day line of 8,567.06, according to Bloomberg data.

We believe this suggests a correction, Tokyo-based analyst Yutaka Miura wrote in a report today. We also believe a key point is whether this can be recovered and maintained. Should the Dow fall below 8,268.64, the post-high low for the month set on May 15, we would then expect downside resistance below the 8,000 level at the 20-year line, which was 7,709.15 as of June 19.

The Dow hasnt closed below 8,000 since April 23. The measure is still up 30 percent from this years low after the government and Federal Reserve pledged $12.8 trillion to pull the economy out of recession.

Technical analysts look at price charts to forecast so- called resistance levels, or ceilings restricting further price increases, and support levels, or floors limiting declines.

To contact the reporter on this story: Maud van Gaal in Amsterdam at [email protected]

I don't think so...Worse didn't pass.

Market's still Volatility. Every Government do a lot of mistake...
They wanna postpone recessions.
If crisises come and happen again,they'll have a big trouble than today because they don't have another tool anymore.

They try to stimulas but they don't look for real demand.
Let's take a look at China Goverment,they support all SMEs and Export Companies to produce more but they don't know that right now's over supply while little demand.. so I guess that in near term all thing will drop again to equilibrium level.

All markets are lifted by money printing and speculate on hope..Thus the worse doesn't pass anytime soon

US yearly economic growth gauge paces higher-ECRI
Fri Jun 19, 2009 10:30am EDT



NEW YORK, June 19 (Reuters) - A gauge of future U.S.
economic growth rose along with its yearly growth rate,
reaffirming hope that yearly growth will turn positive in the
summer months, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based
independent forecasting group, said its Weekly Leading Index
rose to a 36-week high of 117.1 for the week ending June 12,
from an upwardly revised 116.2 the previous week.

In recent weeks, the group has forecast that the U.S.
recession will end sometime during this summer, as its yearly
economic growth reading rebounds from late-2008 lows.

The index's annualized growth rate spiked to an 85-week
high of minus 0.6 percent from the prior week's revised rate of
minus 3.5 percent.

It was ECRI's highest yearly growth reading since the week
ended October 26, 2007, when it stood at minus 0.6 percent.

"With WLI growth rocketing up almost 30 percentage points
in six months, it's virtually pounding the table about the
recession ending this summer," said Lakshman Achuthan, managing
director at ECRI.

The weekly index rose in the latest week because of higher
commodity prices and stronger housing activity, Achuthan said.

http://www.reuters.com/article/companyN ... 6120090619

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US yearly economic growth gauge turns positive-ECRI
Fri Jun 26, 2009 10:30am EDT


NEW YORK, June 26 (Reuters) - A gauge of future U.S.
economic growth rose, and its yearly growth rate turned
positive, raising hopes that the end of the recession is in
sight, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based
independent forecasting group, said its Weekly Leading Index
rose to a 37-week high of 117.6 for the week ending June 19,
from a downwardly revised 117.0 the previous week.

The index's annualized growth rate spiked to a 97-week high
of 2.1 percent from minus 0.6 percent a week ago.

It was ECRI's highest yearly growth reading since the week
ended August 10, 2007, when it stood at 3.4 percent.

"Following a 28-week upturn, WLI growth has broken into
positive territory for the first time in over 22 months -- an
affirmation that an end to the recession is at hand," said
Lakshman Achuthan, managing director at ECRI.

The weekly index rose in the latest week because of
stronger housing activity and investor confidence, Achuthan
said.

http://www.reuters.com/article/marketsN ... 7920090626

FedEx ตัวชี้บ่งกิจกรรมทางเศรษฐกิจที่ดีตัวหนึ่ง .................

http://www.cnbc.com/id/31751676/site/14081545/for/cnbc/

LOSO เขียน:FedEx ตัวชี้บ่งกิจกรรมทางเศรษฐกิจที่ดีตัวหนึ่ง .................

http://www.cnbc.com/id/31751676/site/14081545/for/cnbc/

ดูยังไงครับผม มันสัมพันธ์กันอย่างไรครับ

10 REASONS WHY NOW IS A GREAT TIME  TO INVEST IN THE ENERGY SECTOR !!!!

http://www.financialsense.com/editorial ... /0702.html

Commodities: Bursting Bubble or Crouching Tiger?

http://www.financialsense.com/Market/cp ... /0708.html

The Recession Is… Over?

What America's best economic forecaster is saying.

Could our long national nightmare be over? The economic contraction, this Great Recession, began in December 2007, and there's no apparent end in sight. As the unemployment rate has spiked, analysts have thrown cold water on Federal Reserve Chairman Ben Bernanke's March sighting of "green shoots." The stock market's spring rally has fizzled.

But in this season of doubt, I'm prepared to declare that the recession is really, most probably over. Why? Well, it's not because the economists surveyed by the Wall Street Journal believe it'll end in this quarter. (These guys wouldn't know an economic inflection point if it hit them upside the head. All through 2008, when the economy was contracting, they projected growth for the year.) No, two of the best and most objective forecasters, who are not connected to investment banks or to the CNBC noise machine, have recently called the upturn. Macroeconomic Advisers, the St. Louis-based consulting firm that compiles a monthly GDP index, reported to its clients Monday that while second-quarter GDP was tracking at negative 0.1 percent (recession), the third quarter was tracking at 2.4 percent growth.

The folks at the Economic Cycles Research Institute agree enthusiastically. It's not because they've detected green pea shoots in Central Park. Rather, it's because we've seen the three P's, says Lakshman Achuthan, managing director at ECRI, which has been studying business cycles for decades and was one of the few outfits to call the last two recessions with any degree of accuracy.
<A TARGET="_blank" HREF="http://ad.doubleclick.net/click%3Bh=v8/ ... -n97"><IMG SRC="http://m1.2mdn.net/2017668/N97_conv_PEG ... 00x250.gif" BORDER=0></A>

The economic data that get the most play in the news—unemployment, retail sales—are coincident or lagging indicators and historically have not revealed much about directional changes in the economy. ECRI's proprietary methodology breaks down indicators into a long-leading index, a weekly leading index, and a short-leading index. "We watch for turning points in the leading indexes to anticipate turning points in the business cycle and the overall economy," says Achuthan. It's tough to recognize transitions objectively "because so often our hopes and fears can get in the way." To prevent exuberance and despair from clouding vision, ECRI looks for the three P's: a pronounced rise in the leading indicators; one that persists for at least three months; and one that's pervasive, meaning a majority of indicators are moving in the same direction.

The long-leading index—which goes back to the 1920s and doesn't include stock prices but does include measures related to credit, housing, productivity, and profits—hits bottom and starts to climb about six months before a recession ends. The weekly leading index calls directional shifts about three to four months in advance. And the short-leading index, which includes stock prices and jobless claims, is typically the last to turn up.

All three are now flashing green. According to Achuthan, the long-leading index growth rate has been recovering since November 2008, the weekly leading index has been recovering since last December, and the short-leading index growth rate bottomed in February 2009. In sequence, each turned up, "and by April the three Ps had all been satisfied." Sure, corporate profits continue to disappoint, and the unemployment rate is climbing. But for ECRI, which navigates by relying exclusively on its instruments, that's only a part of their picture. They're the Spocks of the economic forecasting crowd—unemotional, uninvested in anything but the logic of what history and their dashboard tell them. "From our vantage point, every week and every month our call is getting stronger, not weaker, including over the last few weeks," says Achuthan. "The recession is ending somewhere this summer." In fact, it may already be over.
There's plenty of ground for skepticism, in part because the news flow is still quite negative, especially when it comes to corporate profits. ECRI's response? "Indicators are typically judged by their freshness, not their prescience. Since most market-moving numbers are coincident to short leaning, while corporate guidance is often lagging, it is no surprise that analysts do not discern any convincing evidence of an economic upturn."

Still, Achuthan warns that one of the most important indicators—employment—isn't showing recovery yet. The reason: The combination of deleveraging and the long-term decline of manufacturing is hindering job creation and destroying existing jobs. After the last recession ended in 2001, the service sector created jobs, but payroll employment continued to fall through 2003 because millions of jobs were lost in the manufacturing sector during the expansion. "We may see some echo of that in this recovery." But while employment is vital, payroll jobs growth alone doesn't make the difference between recession and expansion.

"We've always felt that employment is very important, but it's a roughly coincident indicator," said Achuthan. "We would not expect the employment indicators to be mirroring anything we're seeing in the leading indicators." ECRI notes that job losses and unemployment claims are off their worst levels. "If we're right and the recession is over, the job market should improve by year's end."

Of course, improvement doesn't mean the sort of 1990s-vintage broad-based employment growth that boosts wages and expands benefits coverage. And without the tailwind of cheap money and a housing boom, it's difficult to see—as it always is at the beginning of expansions—what is going to produce large-scale jobs growth.

The recession is over! Let the jobless recovery begin!

http://www.newsweek.com/id/206631

Wesbury: The Economy Is Much Stronger Than the Media Says

There's a growing consensus the economy will start growing again later this year but 2010 will be characterized by subpar growth. That consensus is wrong, according to Brian Wesbury, chief economist at First Trust Advisors, who believes there will be a V-shaped recovery.

"If you're optimistic today people look at you like you've got three eyes," Wesbury jokes. But as detailed in a recent Forbes column and the accompanying video, he predicts real (i.e. inflation-adjusted) GDP will be 3.5% in the second half of 2009 and 4.5% in 2010


Why We Expect 4% GDP Growth
Brian S. Wesbury and Robert Stein, 07.14.09, 12:01 AM EDT

http://www.forbes.com/2009/07/13/gdp-gr ... -2009.html

US yearly economic growth at fresh 5-yr high--ECRI
Fri Jul 24, 2009 3:30pm EDT


NEW YORK, July 24 (Reuters) - A gauge of future U.S.
economic growth edged higher in the latest week, while its
measure of annual growth continued to stride at five-year
highs, feeding hopes that a smooth recovery is due this year, a
research group said on Friday.

The Economic Cycle Research Institute, a New York-based
independent forecasting group, said its Weekly Leading Index
rose to 118.4 in the week to July 17 from 118.1 the previous
week.

The index's annualized growth rate jumped to a fresh
five-year high of 7.7 percent from 7.0 percent one week ago.

It was the index's highest yearly growth rate reading since
the week ended May 7, 2004, when it stood at 7.8 percent.

"With WLI growth climbing to a new five-year high, it is
reaffirming that the end of recession is at hand and that the
U.S. economy is poised for recovery in short order," said
Lakshman Achuthan, managing director at ECRI.

The weekly index rose due to higher stock and commodity
prices, said Achuthan.
(Reporting by Camille Drummond, Editing by Chizu Nomiyama)

http://www.reuters.com/article/economic ... 5720090724

Bernanke: Economy to bounce back stronger
Last Updated: July 27, 2009: 10:37 AM ET

NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke said Sunday that lessons learned from the recession and the financial crisis will help make the economy stronger than it was before the crisis.

http://money.cnn.com/2009/07/26/news/ec ... /index.htm

US recovery to be "stronger than many expect"--ECRI
Fri Jul 31, 2009 10:30am EDT

NEW YORK, July 31 (Reuters) - A measure of future U.S. economic growth climbed higher in the latest week while its yearly growth rate hit a fresh five-year high, signaling a stronger recovery than originally forecast, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 119.6 in the week ended July 24 from a downwardly revised 118.3 the previous week, which was originally reported at 118.4.

The index's annualized growth rate continued to soar, reaching a new five-year high of 8.8 percent from 7.7 percent the prior week.

It was the highest yearly growth reading since the week to Oct. 3, 2008 when it was 8.9 percent.

ECRI Managing Director Lakshman Achuthan has said the recession is already beginning to wane, and that increased stimulus from Washington is not necessary for economic growth.

"Not only is the U.S. recession set to end this summer, but the recovery is apt to be stronger than many expect."

The weekly index rose in the latest week due to firmer housing activity, said Achuthan. (Reporting by Camille Drummond, Editing by Chizu Nomiyama)

http://www.reuters.com/article/companyN ... 7420090731

มีแต่ข่าวดีๆทั้งนั้นเลย  :lol:   :lol:  :lol: