Global markets geared up for a busy week amid challenging conditions in a global economy that is still snowed under a avalanche of challenges. European retailers prepared to show swooning earnings, oil and oil producers were down across the board on demand apprehensions, and Alcoa was set to kick off the earnings season reports with what is very likely some very poor numbers. On the Ponzi-watch radar: allegations that homebuilder Lennar may have treated its joint ventures like the similarly-named scheme.
This week's guessing game is already focusing on the ECB and its need to put policy into reverse and ease aggressively. The region cannot afford further hawkish posturing from the ECB and is seen as likely to cut its benchmark rate by half a percent, to 2%. Even then, the ECB would be left the lone standout among big central banks, with the highest rate among them. Its head, Mr. Trichet tried to divert attention from reality with a clever allusion to his expected 'significant pickup in the global economy' in...2010.
Very interesting jawboning from someone who has to deal with 2009 first. Kind of like the statement by Mercedes boss Zetsche saying the firm does not plan to cut car prices. Keyword: plan. Citigroup never planned to break-up. It is breaking up. UBS never expected to lose $8 billion in the last quarter. It likely will. Bernie Madoff never planned to go to the Big House. Looks like he might. Today.
Gold prices fell 2.3% ahead of the NY session's opening this morning, touching a low of $833.70 per ounce on the back of a falling euro/rising dollar/falling oil combination brought on by the above-mentioned global background conditions. Weak physical demand in key markets also contributed to overnight selling, despite an increase in net long spec positions in New York ;last week. Participants reported tacit apprehensions about the source of funding after the IMF said it needs an additional $150 billion to help fast-imploding emerging economies.
Monday's gold trading opened with a $19.50 loss per ounce, with spot prices quoted at $834.00 in active dealings. Price pressure persists, and the liquidation patterns could usher in tests at lower supports around $815-$820 an ounce. Silver fell 30 cents and broke to five cents under $11 per ounce, while platinum gave some of its gains from the previous week back, in a $29 fall to $960 per ounce. Palladium dropped $5 to $187 this morning.
The US dollar was fairly steady at 82.75 on the index, however crude oil struggled between $38 and $39 per barrel with a 6% drop, as demand worries kept speculators...worried. To make matters worse (for oil and noble metals), automakers suddenly pulled several electric and a slew of hybrid rabbits out of their Detroit industry showcase hat, showing that when it comes to their own survival, they have the know-how.
The engineering and technology just happened to be sitting on the shelf, while consumers were herded into gas-guzzling SUVs on the premise of 'lifestyle' needs created by their marketing firms. Payback time. Toyota handed the firm's reins over to members of the (founding) Toyoda family in an aggressive move to restore the firm's industry position. Honda decided to cut its US inventories to levels that better reflect its nearly empty showrooms. Ford will now likely accept the Uncle Sam loan handouts as its sales come in way under expectations. Ah yes, it is all about expectations and plans versus reality and actual numbers this week. Clash away.
That's all for now, there is plenty to watch this morning, no need to bring additional angles to the dark brew. Be back later. Watch the dollar. Repeat: watch the dollar. Oh, and oil too.