Oil rose the most in almost a week in New York as the dollar declined, boosting commodities’ appeal as an alternative investment, and Goldman Sachs Group Inc. and Morgan Stanley increased their oil-price outlooks.
Oil jumped as much as 2.3 percent as the Dollar Index, which tracks the currency against six major counterparts, slipped from a seven-week high and U.S. equities advanced. Goldman Sachs and Morgan Stanley raised their estimates for Brent oil futures, saying the prolonged conflict in Libya is eating into OPEC spare capacity.
“The dollar’s under pressure and you’re having a bit of an equity market rebound,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The upward revisions to some of the investment-bank oil forecasts may be lending a certain positive sentiment to this market.”
Last Saturday Faye and I had coffee at the Pannikin, one of our local coffeehouses. A cup of decaf sells for two dollars. The place was busy with people eating lunch, talking or just drinking coffee. I asked Faye, "Does this look like people are cutting back because of the Great Recession?" Faye shook her head, "Hardly," she smiled.
I reminisced, the Great Depression ended around 1942. That was about 60 years ago. Three or four generations have elapsed since 1942. So it's been three or four generations since Americans have experienced what I call "hard times." Only old codgers like Richard Russell remember what it was like during the Great Depression. Those were the days when people clung to every nickel and dime they could scrape together.
In 1940, if I wanted some coffee, I probably already had it in the thermos bottle that I was cramped into my lunch box. Or I could go to the nearest drug store or maybe to an Automat and buy a cup of coffee for a nickel. Actually, I'd probably prefer Woolworth's because there coffee was always a nickel, and there'd be no charge for "refills" (as many as you wanted).
It occurred to me sitting there with Faye at the Pannikin coffee house that people today have no idea or concept of cutting back and saving money. Here were kids buying cups of coffee for two dollars a cup and ordering sandwiches or salads for 5 to 8 dollars a pop. "Well," I thought, "If the government isn't cutting back, why should the people? It's the way of the world today." But I have this feeling, this creepy feeling, that it isn't going to last. Somewhere ahead I believe the Great Recession could turn in to the second Great Depression.
Copper futures fell nearly 4% as another sharp decline in China's copper imports and a stronger dollar pressured prices.
In recent months Beijing's tighter monetary policy has forced many factory managers to use up inventories without replenishing them. Companies that use copper to make electrical wiring and other products—the main source of copper demand in China—are struggling to get credit, and many are relying on "hand-to-mouth" purchases to feed production lines.
China is the world's top copper consumer, accounting for 30% of demand, but imports have been on a steep decline in recent months. On Monday, China reported its imports of the metal in the first four months of this year were 756,199 metric tons, 29% less than the same period last year. April refined copper imports fell 48% from a year earlier and down 17% from last month to 160,236 metric tons.
Oil dropped more than 2 percent Monday as the dollar strengthened and an energy research group said it expected growth in Chinese demand for oil to slow later this year.
At the pump, gas prices continued to fall as oil retreated.
Benchmark crude for July delivery lost $2.44, or 2.4 percent, at $97.66 per barrel on the New York Mercantile Exchange in afternoon trading. In London, Brent crude gave up $2.62 or 2.3 percent, at $109.77 per barrel on the ICE Futures exchange.
Crude dropped as the dollar rose against other currencies. Oil is priced in dollars, and it tends to fall as the dollar rises and makes crude more expensive for investors holding foreign money. The U.S. Dollar Index, which measures the dollar against other major currencies, rose 0.8 percent amid concerns about Europe's debt crisis.
Investors have taken the old Wall Street adage of "Sell in May, then go away" to heart this year, and the stock market's slump is likely to persist during the last week of the month.
The Dow (INDU), S&P 500 (SPX) and the Nasdaq (COMP) have each lost more than 2% during the past three weeks, pressured by the latest round of economic and corporate news, which are suggesting that the economic recovery may be slowing.
355Print Last week, reports on housing starts and existing home sales came in weaker than expected, and regional manufacturing activity slowed to the lowest level since October.
Eric,
Silver:
1. Does the diffusion index have to rise above 38 to have a bottom?
2. If the DI goes higher into mid June does that mean silver has to
decline in price?
-------
Looks to me like silver has hit its bottom but needs more up and down
to complete the process. I can see some big swings in here over the
coming 4 weeks!
Thanks,Denny
COT Money Flow Data Table:
Stay tuned for the possibly of further comments on individual markets within the table.
Eric,
I really like your site because no matter what you maintain your bullish position, especially with respect to the miners. I think we're at a critical juncture here once again with the whole sector. I too believe in much higher prices for the metals and I still feel that the mining stocks should be much higher. Recently you did a great piece on the historic undervaluation of the stocks versus the metals themselves. Right now the mining stocks (GDX for example) are riding above a major support line going back from the peak from before 2008. The GDX broke through that level around 54 last year, ran up and hit 64, then got smashed by the shorts down to 53 in January. Now here again, we got another beat down to around 53 again and got support. We are still oversold. I did liquidate some big positions but held core positions. My mistake was getting back in too early, but I'm reloaded now and I still feel that these stocks need to ramp up in a big way. It seems way, way overdue. I like your historical analysis that we could be pushing away from shore after a 30 year consolidation! What I'd like you to do is periodically post the GDX to Gold ratio even more often, especially now as we enter into what could be a huge rally in the shares as I do believe in your "Three taps and out" thesis. Once we get this rally up to 64 in GDX again, and then through that mark as I anticipate, this is where your posting of the ratio will be very helpful as next time I will be selling into that big rally as I would like to miss out on some of these selloffs! It's unbelievable how they can beat these shares down! The manipulation is just crazy. I think that part of this bull market that will drive these shares higher is the day that some of the big ETFs like GLD and SLV start having some big issues that J.S. speaks of in his book. If that happens, it will first and foremost be wonderful but it will also possibly be a key to unlocking the miners into a new phase of their bull market. You've been a great help and I look forward to more great info. Do you think we're on the cusp of the big breakout rally at long last in the shares?
Sincerely,
Noah
Critical support tends to be tested as resistance.
The Federal Reserve last month began debating how it should start reversing policies that pumped billions of dollars into the economy during the recession. Some members said the Fed might need to start boosting interest rates this year to guard against inflation.
Fed policymakers didn't commit to taking any action at the April 26-27 meeting, according to minutes released Wednesday. But they agreed the economy was improving and if that continued the Fed would need to remove its massive to prevent consumer prices from getting out of control.
A majority of participants said the best method for tightening credit would be to lift the federal funds rate, which is now at a record low near zero. The federal funds rate is the interest banks pay each other on overnight loans. Raising that rate would likely precede sales of mortgages or Treasury securities in its vast portfolio.
Nevsun Resources Ltd. (TSX:NSU - News)(AMEX:NSU - News) is pleased to announce that the Company's Board of Directors has approved a semi-annual cash dividend of US$0.03 cents per common share (US$0.06 per common share annually). The dividend is payable on July 15, 2011, to shareholders of record as of the start of business on June 30, 2011.
"The successful startup of the high grade, low cost Bisha mine is the start of significant cash flow for the Company. We are focused on significant internal reserve expansion at Bisha, as we strive to double our reserves this year, while also reviewing additional opportunities for Nevsun," said Cliff Davis, Chief Executive Officer. "With $103 million cash at quarter end and significant ongoing cash flow, Nevsun is well positioned to fund this growth and provide a dividend return to our shareholders."
I haven't shorted bonds yet, but you have a very good memory. I'm going to start shorting bonds soon. In fact, maybe when we finish this I might go over and short some bonds now that you've reminded me. - Jim Rogers in The Street.com
PIMCO's Bill Gross, manager of the world's largest bond fund, said on Monday it was a "misconception" the firm was short on U.S. Treasuries, saying the fund never actually bet against U.S. Treasuries.
Gross told CNBC the firm was "very underweight" the U.S. Treasury market and holds other bonds that are doing better than Treasury securities.
The company's website in May showed PIMCO's $240 billion Total Return fund (NASDAQ:PTTRX - News) was short U.S. government-related debt -- this includes Treasuries, TIPS, agencies, interest rate swaps, Treasury futures and options, and FDIC-guaranteed corporate securities.
In recent weeks, metals of all sorts--precious and industrial--have taken a beating in a major selloff in the commodities market. Experts cite a number of reasons, including speculation, increased margin requirements (how much collateral investors have to put down), and concerns that the economic recovery may not be as strong as previously thought. But experts say the losses in copper are the most troubling.
"Dr. Copper" is one of most over-hyped economic indicators out there. The real economic is far too complex to be simplified into follow Dr. Copper. Besides, copper like stocks, industrial and agricultural commodities are being driven more by Dr. Liquidity than supply and demand dynamics. Copper’s real trend looks a lot different than its nominal (fiat money) trend. Those that adhere to the Dr. Copper theory better be able to distinguish the difference between the two trends.
In recent weeks, metals of all sorts--precious and industrial--have taken a beating in a major selloff in the commodities market. Experts cite a number of reasons, including speculation, increased margin requirements (how much collateral investors have to put down), and concerns that the economic recovery may not be as strong as previously thought. But experts say the losses in copper are the most troubling.
While scarce precious metals like gold and silver are often perceived as safe havens or inflation hedges because of their inherent value, copper is an industrial metal that's seen as a leading indicator for the future of global economic growth. It's often called "Dr. Copper" because of its past success in forecasting the direction of the economy.
"Oftentimes, the price action in copper indicates what's going on in the global economy because it's used so much for so many industrial purposes," including electrical wiring, says Sean Brodrick, small-cap and natural resource analyst for the blog Uncommon Wisdom Daily. "The breakdown we're seeing in copper right now looks quite ominous."
The $38 billion in spending cuts agreed to last week won't prevent this year's budget deficit from setting another record high, estimated at $1.5 trillion.
Most of the agreed-to spending cuts either affect future budgets or amount to accounting gimmicks that won't reduce actual spending.
The Treasury Department reported Tuesday that the deficit already totals $829.4 billion through the first six months of the budget year -- a figure that until 2009 would have been the biggest ever for an entire year. For March alone, the government ran a deficit of $188 billion.
US house prices have suffered their biggest quarterly fall since the collapse of Lehman Brothers, underlining the scale of the headwinds still facing the world's biggest economy.
Average house prices slumped 3pc in the first three months of this year, a decline that pushed the number of homeowners in negative equity – where a mortgage is higher than the value of a property – to 28pc from 22pc a year earlier, according to new research from Zillow, a major US property website.
