Good Morning,

Unsettled conditions permeated various markets overnight, as the US faces what is sure to be a spectacularly negative news headline this morning. Apprehensions about the probability that December's tally will reveal the worst month of job losses since World War II have infused market sentiment for the second half of this week, and could make for some dramatic action on this second Friday of 2009. Mind you, Canada shed twice as many jobs as anticipated during the final month of 2008, raising our own unemployment rate to 6.6% in an unwelcome race with our neighbours. Is there a top-ten economy left around the world without the R label having been applied to it yet?

Economic activity edged closer to a standstill in the UK as output fell nearly 3% in November, to a near three-decade low, Korea cut interest rates to a record low amid signs of severe contraction, and the Bundesbank said that the German economic dip is likely to be deeper than previously expected. Today's grim economic news roundup brought to you courtesy of the collateral damage of the contained subprime crisis.

New York gold dealings opened with a tilt towards lower values, while participants were awaiting the jobs data and as crude oil lost more value and headed towards $41 per barrel. Spot gold was off $2.50 at $854.40 per ounce, monitoring an up to now unchanged US dollar (at 81.64) on the index. Silver climbed 8 cents, to start the day at $11.18 while platinum gained $4 to open at $991 and palladium fell $1 to $194 an ounce.

Investec, a South African investment bank, sees platinum at $970 this year, followed by $1,350 next year. The firm also expects palladium at $220 in 2009, and a climb to only $250 in 2010 ( a $100 lower level than the previous estimates). West Australia Business News reports that a Deloitte analyst expects more junior mining failures this year as cash flow dries up, and as credit is still harder to find than a 25.5-kilo gold nugget in Kalgoorlie.

And now, it's official: The U.S. economy lost 524,000 jobs in December, closing out the worst year for job losses since World War II, the Labor Department said Friday. Nearly 2.6 million jobs were lost in 2008, with 1.9 million destroyed in just the past four months, according to a survey of work places. It's the biggest job loss in any calendar year since 1945. The unemployment rate rose to 7.2%, the highest in 16 years. Unemployment increased by 632,000 to 11.1 million, according to the survey of households. - Marketwatch.

Nothing one can add to that set of numbers, aside from the observation the perhaps economist Nouriel Roubini is being conservative when he estimates a two-year long US recession and a 5% drop in GDP. The first half of the current year is expected to look worse than what we have seen up to now. If that is still possible.

Gold continues to meander in the broader $830-$890 channel and a break through either end of that price spectrum could usher in a $40 to $50 follow-through that could bring values to either $775 or to $940. And, at, and beyond those levels, the fun could really extend by about the same incremental amounts. But, enough of the early 2009 guessing game. The immediate focus is (or ought to be) on headlines such as Signet's 15% drop in jewelry sales in the US and the UK (this, during Santa season!) and on India's nascent gold ETF sector, which lost 4.3% in assets under management during December's price spike in bullion. For the week, gold is heading towards a roughly 2% net loss - its first such dip in five.

While markets digest what is a very tough serving of economic news today, some have already indicated that the figures could have been worse and are placing counterintuitive trades, and 24/7 Wall Street's Doug McIntyre finds the seeds of potential recovery in the very same data:

By most estimates the report on December unemployment could hardly have been worse. Many experts believe that 500,000 jobs would be lost and that unemployment would rise to 7%. The actual figures came in at 524,000 and 7.2%.

But, the disaster may be in large part what saves the economy.

The great enemy of stopping the frightful fall in employment, the catastrophe of corporate earnings, and the plunging housing market is that time is not on the government's side. That is an observation which has almost been made too often.

If Nobel Prize winner Paul Krugman and other leading economists are right, the federal government has less than two months to get a huge economic stimulus package into the market place. There is still debate about whether it should focus on building infrastructure, creating jobs, keeping mortgages from default, or cutting taxes. Which of those is the best path is impossible to determine beforehand. It may be that it will never be entirely clear exactly what hurt or helped the economy. Those issues are still being debated when it comes to the reasons American got into and out of the Great Depression.

Congress and the Administration are concerned about the economy but the panic and the adrenalin rush which accompanies it have not hit with a full force. The prospect of another 524,000 people being put out of work in just 30 days and the likelihood that the situation will only get worse as industries from retail and automotive cut more people may be the only thing that drives an admittedly imperfect set of bills though Congress, to the President's desk, and into the bureaucracy that must implement the programs.

The debate over which direction a stimulus package should go is a debate over perfection. Everyone involved has a strong idea of which measures are flawed and which will work. These are randomly colliding like pin-balls now and there is not enough incentive to take a course, steer by it, and hope that it will be close to the right decision.

The jobs reports was awful, but the sight of the gallows focuses the mind.

Don't touch that remote control. Friday is still young.