Good Morning,

Three days of active US dollar purchases, took a break today as upcoming US retail sales data could hold the currency back for a period of consolidation. Traders suggest however, that given yesterday's shrinkage in the trade gap, the greenback's rally has further to run and that it is not the bounce of a cat in rigor mortis. In any event, the release of the December sales data is likely to show a near-absence of visits to most stores by a Mr. Claus. Sales at Tiffany's were down 21% vis a vis 2008, just for starters.

Beige Book data is also due later on, and could prompt some to ask for a colour change in the cover towards darker hues. Not that other economies are faring a whole lot better. Germany's for instance, contracted to a meager 1.3% growth rate - the worst in twenty years. China thus becomes the world's third largest economy, with the US and Japan still ahead. For the time being. The country revised its 2007 growth rate to 13 (!) percent. It will be lucky if it can show half of that unreal number at the end of 2009. And so, the world turns...

The beleaguered banking sector is back in the news, with Deutsche Bank reporting $6.3 billion in Q4 losses. Germany's largest bank saw its stock fall by over 10% following the shocking loss, but HSBC Holdings Plc was not far behind, showing a near 8% loss in its shares, after it was suggested that Europe's largest bank by market value might have to raise $30 billion to bolster capital and cut its dividend in half. The disassembly of Citi continues, following the Morgan Barney hat trick it offered late last week. Now, its consumer lending unit appears to be up for grabs. A return to Citibank? Most likely, as nearly two dozen of the empire's businesses have already been let go of.

Amid signs that OPEC leaders are intent on augmenting the cuts in oil production in an effort to support swooning prices, gold prices found a modicum of support near $820 overnight. Black gold rose to just above $39 per barrel and gave bullion a bit of room to maneuver and attempt to get back to the $830 level. The going was relatively tough, as physical demand appears to still be tepid and as the dollar only gave up 0.12 on the index, to hover just above the 84.00 mark.

Midweek New York spot dealings opened with a $4.00 gain for gold, quoted at $824.50 per ounce with ten minutes to go until the retails sales data was released. Participants remain wary of index rebalancing and must-sell scenarios which are still prevalent among spec funds, and are pegging support at $813, followed by $800 per ounce. Silver was off flat at the open, starting the day at $10.71 an ounce. Platinum rose $4 to $941 and palladium was unchanged at $183 an ounce.

Merger talks between Impala Platinum and Northam Platinum collapsed amid difficult conditions in the global economy, the commodities markets, and stock markets. So much for Impala having access to relatively shallow noble metal deposits that are less costly to mine. Toyota will have its middle management purchase its own brand of automobiles ('voluntarily' of course - but we know how that goes in the Japanese workplace) following a 10% pay cut it has already taken. Imagine for a moment if GM asked its managers to buy some lovely Buick Terrazas to tool around in...nah!

Retail sales results are in, and show a 2.7% decline (actually down by 3.1% excluding autos, twice as large as anticipated, and the biggest such slump on record). The US consumer is out cold, job gone, wallets empty, and has indeed (over)shopped until finally dropping. The mall frivolous mall raids of yesteryear are now confirmed to be o v e r. Add Gottschalks to the Chapter 11 roster as of today.

The dollar headed...higher following the retail numbers, and oil pared its gains to but 65 cents on the day. Gold and silver prices fell into the red after the data and showed signs of nervousness. Treasurys gained on the poor retail numbers. No risk for me, thank you. Of any kind.

This could still be a day for a falling Dow(n) number. The question is, how much cash will some wish to raise to head for the hills with?

Until later,