The dollar slipped against a basket of currencies, touching a nearly one-year low earlier, as the sell-off continued, on track for its worst weekly performance in more than three months. The greenback also fell to a fresh 2009 low versus the euro, but it recouped most of its losses.

The prospects for economic recovery and low U.S. borrowing rates continued to encourage investors to move cash out of the dollar into riskier assets in other currencies.

“Today we’re getting a little bit more action versus the yen and weaker U.S. stocks are helping,” said Patrick Brodie, chief FX dealer at Sumitomo Mitsui Banking Corp in New York.

The yen typically benefits when there is heightened risk aversion in the market.

“In the dollar’s case, selling has been fairly persistent all week and today is no exception. The euro and the Australian dollar should continue to make new highs next week.”

In early afternoon trading in New York, the dollar was down 1.4 percent on the day against the yen at 90.48 yen , having hit a seven-month low of 90.22, according to Reuters data.

Traders say there are option barriers at the 90 yen area, limiting the dollar’s downside.

The dollar was down 2.7 percent this week versus the yen.

The euro was also 1.4 percent lower versus the Japanese currency, trading at 131.88 yen .

The InterContinental Exchange’s dollar index <.DXY>, a gauge of the greenback’s performance against six other major currencies, was down 0.2 percent at 76.655 after falling to 76.457, its lowest in nearly a year.

The euro was little changed at $1.4597 , 2 percent higher on the week. The euro zone single currency hit a 2009 high of $1.4627 earlier, according to Reuters data.

The euro briefly erased gains earlier when a U.S. Coast Guard training exercise on the Potomac river set off a security scare as the United States marked the eighth anniversary of the Sept. 11 attacks.

Investors sold the dollar this week as signs emerged of a global recovery from one of the worst downturns this century. That encouraged investors to leave the perceived safety of the greenback and favor riskier assets such as stocks, emerging markets and commodity-linked currencies.

A report showing improving U.S. consumer sentiment on Friday further added to recent evidence that an economic recovery was picking up speed.

The Reuters/University of Michigan Surveys of Consumers preliminary reading of consumer confidence index for September came in at 70.2, the highest since June.

“Dollar selling momentum has picked up and it is likely to continue for a while,” said Win Thin, a currency strategist at Brown Brothers Harriman in New York.

Solid data out of China added to the view the global economy is on the road to recovery.  Questions about the dollar’s long-term value added to the negative sentiment towards the U.S. currency.

Sterling, meanwhile, rose 0.2 percent to $1.6682, within sight of a one-month high of $1.6742 , while the New Zealand dollar gained 0.5 percent to US$0.7066 .

NEW YORK, Sept 11 (Reuters)

Our forecast today: The government and mainstream media will soon be calling the end of the recession. Leading this feeble cause is the latest ISM manufacturing index, probably the most powerful argument for recovery we’ve seen yet:

This morning, the ISM said its gauge of manufacturing activity had risen to 52.9 in August – out of contraction for the first time since the recession began and the highest score since June 2007. Of course, things are a bit different now, but over the last 60 years, when the manufacturing sector returns to growth, the recession has already ended. That prospect is enhanced by the capacity utilization data we mentioned earlier this month — another recession-ending indicator now glowing green.
What’s more, pending home sales rose 3.2% in July, the National Association of Realtors also reported. With an index score of 97.6, that’s a 12% rise from this time last year, the highest level in two years and the sixth straight month of improving pending sales conditions.
Factor all that in with rising consumer sentiment, home price and stock indexes and we suspect now is around the time when the government will eventually declare the recession ended… which will make way for all kinds of shelved legislation and the political agendas that popularized the current administration in the first place. Then there’s that whole “double dip” dilemma… but we’ll save that for another five minutes.
Yesterday’s gloom from China helped push U.S. stocks down. The S&P 500 fell 0.8%. Today looks like it’ll be even worse. The market got a little bump from the manufacturing and housing data this morning, but as we write, traders are “selling the news” – big time. The S&P had fallen 2% by lunchtime.
“Cyclical equities, commodities and commodity currencies have already moved,” notes our macro adviser Rob Parenteau, “first to reflect the end of the Armageddon bet back in March, and then to reflect the end of the recession bet in July. We suspect investors will seize on the mounting evidence of an economic recovery to redouble their efforts to increase their positions in these asset classes.

“We will be surprised if 10-year Treasury yields do not break 4% by mid-October as this recognition spreads, and we suspect Chairman Bernanke, with the president’s nod for another term at the Fed, will be forced to start talking about normalizing the fed funds rate in Q4 (before actually doing something about it in Q1 2010) if he wishes to keep Treasury bond investors from heading for the hills. A Fed promising a near-zero fed funds rate from here to eternity will surely look far from appetizing to Treasury bond investors if a 4% real GDP growth environment unfolds.”

Wait, 4% GDP growth?

“If we were to naively use the experience of all the recessions of the post-World War II period as a guide, the nearly 4% peak-to-trough decline in real GDP to date in this recession would be the prelude to a first-year recovery growth rate close to 8.5%. This, of course, is unthinkable given the current mess. But if we got only half of that historically normal bounce — which we believe is the correct handicap, given the private sector deleveraging under way — the resulting 4%-plus real GDP growth over the next year would prove nearly twice the current 2-2.25% consensus expectation. Chairman Ben might just want to stick around for that.”

A better life through proven economic thought – that’s the Richebacher Society credo, which Rob has done a fine job carrying on. Find out how you can join their exclusive ranks here.
It’s worth noting, despite yesterday’s sell-off, the S&P ended the month up 3.4%. That spells a 51% shot since March, the best six-month run since 1938. Of course, the last thing you’d want to do now is take some profits… after the most notable winning streak in our lifetimes, the S&P will likely rise another 50%. It’ll probably go up forever.
China is celebrating a stronger manufacturing sector today, too. Its purchasing managers index (like our ISM) rose from 53.3 to 54 in August, signaling its sixth straight month of expansion and the best score in over a year. But is the China boom just a product of too much easy money? It’s starting to seem so… we’ll keep an eye on it.
Here’s another story fanning the economic recovery’s flames:The much-delayed Boeing 787 Dreamliner might finally take flight this year. Late last week, Boeing said that its long saga of delays and frustrations with the much-hyped jet are coming to an end. The first Dreamliner is now on track to leave terra firma by the end of the year, and the jet will actually be delivered to various international airways by the end of 2010.

Just how late is the Dreamliner? Japanese airliner All Nippon will get the first in 2010… since they were originally promised delivery by the start of the Beijing Olympics.

“My next buy recommendation is based on some of the historic changes happening in air transportation,” notes Chris Mayer, who chronicled the Dreamliner saga in the latest Capital & Crisis alert. “One of the key drivers of this change is what I call the Silk Roads of the sky. The aerospace industry has a $6 trillion backlog for new aircraft — which will double the global fleet over the next 20 years.

“In large measure, new and booming trade routes will link all kinds of cities and markets flung all over God’s green footstool. There are hundreds of new airports planned and thousands of new planes that will connect China to Africa to the Middle East and more.

“The thing about the new aircraft is that they are titanium intensive. Titanium is a silvery, lustrous metal that is corrosion resistant and has the highest strength-to-weight ratio of any metal. Aircraft manufacturers love titanium, especially now that the market has crushed the price of titanium, along with everything else.

“That creates some space for us to buy a quality operator now. Titanium prices are way down. Sentiment is terrible, with most analysts only lukewarm to the idea. Most of the near-term news is bad. That gives us a great price to get in on a promising long-term story. Of course, this is already in the process of changing, thanks to the Dreamliner announcement.”

So what’s the best play on this trend? Check out your latest Capital & Crisis alert.
The Canadian economy contracted more than anticipated in the second quarter, the Canadian government admitted today. GDP contracted 3.4% in the period, compared to the 3% Canadian traders anticipated. The first-quarter GDP decline was also revised downward to 6.1% — the worst annualized drop on records dating back to 1961.
“I told you so!” Byron King exclaimed to us in a one-line e-mail sent very early this morning. He’s really not the shouting/gloating type, so we quickly clicked the link he sent along and saw this, the headline of today’s New York Times business section:

“China Tightens Grip on Rare Minerals”

The Old Gray Lady is “breaking news” today on China’s rapidly increasing dominance of rare earth metals… those bottom of the periodic table elements crucial to producing just about every high-tech gadget. The NYT noted that the Chinese government is just shy of cornering the market of rare earths, and that its export quotas have been shrinking every year, with this year on track to be the smallest yet.

Readers of The 5 or Byron’s Energy & Scarcity Investor will likely yawn and turn the page… they have been reading about this since March 2008.

“There are more than a few stock pushers out there,” notes Byron, “explaining to people how to ‘profit from the squeeze in rare earths.’ But there’s really only ONE decent publicly traded company that will give you a long-term return in rare earths.”

That company is in the Energy & Scarcity Investor portfolio. Learn about it here.
Speaking of rare metals, gold’s been keeping an awfully low profile lately. Over the past 30 days, the spot price has kept to a $35 range, bouncing mostly between $940-955. The spot price is in the higher end of that paradigm today, at $952 an ounce.
The positive manufacturing numbers stopped the oil sell-off today. After a nearly $3 fall yesterday, light, sweet crude arrested its fall at $69 a barrel.
The dollar is just a bit higher. Up a few tenths of a point, to 78.2, the dollar index is still less than a point above its 2009 low.
“Inflation or deflation?” a reader asks, referring to Bill Bonner’s forecast that betting on inflation feels too easy. “I can tell you this…

“I live on a very strict budget, and I am not stretching on this statement. In the last 18-24 months, my bills have gone up considerably. I will give you some examples. Thirty-nine ounces of Maxwell House Coffee was about $5.50 a year ago, and today it comes in a smaller (34.5 oz.) package for about $8.00. WOW! A 5 lb. bag of sugar was around $1.99. Now it is $2.29. Dry cereal used to come in a larger package also, and went from $2.00 a box to a whopping $2.39. Soft drinks: A six-pack of 24 oz. bottles was $3.00 and NOW it is an unbelievable $4.29! Dog food from $8.99 to $10.99.

“My cable bill has gone up two or three times in the last two years (includes Internet and TV). My electric bill has gone up just a little.

“What went down? My homeowners insurance and natural gas bills

“The problem here is that the difference between what has increased in price and what has decreased still leaves me in the hole. In other words, after all the bills are paid, I am paying MORE this year!”

Uncle Sam responds: That’s simply not possible, madam. Consumer price inflation is down 2.1% over the last year, the largest decline since 1950. If people like you were right, it would undermine our whole methodology. There must be something wrong with your budget.
“Given the data from the Rasmussen poll you mentioned,” a reader writes of Rasmussen’s great “throw the bums out” poll, “I guess if there were an all-or-nothing choice when people voted we might finally make some progress in fixing Congress. I think the data are misleading, though, since polls have shown these types of numbers in the past, but of course, when it gets right down to it, people re-elect their local pork provider (over 90% of incumbents win in Congress).

“One poll I saw probably 10 years ago asked if Congress was corrupt, and 90% replied yes, but when asked about their own local rep, people said he was one of the few good politicians. This is the problem: All these guys are just horse-traders for their local projects, many of which we don’t need, especially with trillion-dollar deficits staring us in the face for the foreseeable future. Who knows, as the fallout from the never ending bailout programs recedes, perhaps people will start voting some of these idiots out of office — Rep. Rangel, with his forgotten income and taxes, might not be the best guy to run the Ways and Means Committee for starters. Keep up the great work.”

The 5: Thanks, it’s our pleasure.

Sourc: Manufacturing Rebound, A Contrarian Play, Rare Earths and More!

Dow component Boeing Co could weigh on the market after Australia’s Qantas Airways Ltd canceled orders for 15 new Dreamliner planes and deferred orders for another 15 in a new blow to the project.

Boeing fell 2.9 percent to $41.30 before the opening bell.

As investors try to assess the market’s next move after a sharp bounce, J.P. Morgan Securities said the S&P 500 index  is likely to fall to between 830 and 875 through September, given its virtually uninterrupted rise since its March lows.

The strategists also urged investors to use the correction to build positions in cyclical stocks. The index ended Thursday at 920.26.

The broad S&P had rallied as much as 40 percent from March’s 12-year low, but the run-up has stalled as initial optimism about a stabilizing economy has been tempered by worries the recovery could be tepid. The index is up about 36 percent from the March trough.

Data on tap for the day includes a report on personal income due at 8:30 a.m. EDT (1230 GMT) and consumer sentiment at 9:55 a.m. (1355 GMT).

S&P 500 futures eased 2.60 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futuresslipped 14 points, and Nasdaq 100 futures were off 4.50 points.

Palm Inc could boost technology shares after it posted a narrower-than-expected loss and said demand was strong for its new Pre smartphone. Palm jumped 11.9 percent to $15.69 in premarket trade.

Stocks could also be buffeted by end-of-quarter “window dressing as portfolio managers sell stocks with big losses and buy some of the quarter’s best-performing stocks to help improve their returns.

On Thursday, stocks rose on investor relief that Fed Chairman Ben Bernanke withstood a barrage of pointed questions from Congress on the Bank of America-Merrill Lynch deal relatively unscathed. Retailer and home builder shares led markets higher for much of the session.

NEW YORK, June 26 (Reuters)

U.S. stocks were mostly higher in thin trade on Friday, as investors eyed retail sales on the first day of the shopping season after the Thanksgiving Day holiday, to gauge the extent of weakening consumer demand.

European and Asian shares were also higher, despite the attacks in Mumbai, India, while U.S. Treasury debt prices and the U.S. dollar both gained as investors continued to look for safe-havens as global economic growth slows.

“It’s a light volume day so you’re going to see some choppy trading, with so many people out,” said Robert Finkel, consumer trader at Stifel Nicolaus in Baltimore of the U.S. stock market.

“I’m watching how things go from a retail standpoint today – we’ve heard a lot of speculation about how bad it’s going to be, now we’ll get some proper feedback.”

The U.S. holiday weekend will test the strength of consumer sentiment, a main driver of the U.S. economy, as the country faces its worst financial crisis since the Great Depression. If the U.S. consumer fails to buy, companies across the globe can expect to see fewer exports and profits.

The Dow Jones industrial average rose 32.42 points, or 0.4 percent, to 8,759.03. The Standard & Poor’s 500 Index rose 0.66 points, or 0.1 percent, at 888.34. The Nasdaq Composite Index shed 11.99 points, or 0.8 percent, to 1,520.11.

The S&P’s retail index dipped 2.3 percent.

The U.S. stock market was closed Thursday for the Thanksgiving holiday and is trading for half the day on Friday. On Wednesday, stocks ended higher, capping the Dow’s biggest four-day percentage gain since 1932.

Technology shares slid after signs of a downturn in global chip demand as STMicroelectronics cut its fourth-quarter outlook. Industry sources said Taiwan companies want to slash costs. The semiconductor index shed 1.1 percent.

OPEC MEETS

U.S. light crude for January delivery stood at $51.52 a barrel, down $2.90, on course to end the month down more than 20 percent, as OPEC ministers prepared to meet in Cairo to discuss potential further supply cuts to combat a global fall in demand .

In the U.S. Chevron fell 1.9 percent tracking oil lower.

Indian stocks ended higher despite the attacks in Mumbai, but India’s 10-year bond yield fell to its lowest level in three years on expectations that the attacks will an impetus to central bank interest rate cuts.

Globally, the MSCI all-country world index was 0.1 percent firmer, although it has gained more than 10 percent this week, the first weekly gain in four weeks.

“On a range of measures, there is undoubted value to be found in many of the world’s equity markets,” said Sarah Arkle, chief investment officer with Threadneedle Asset Management.

The pan-European FTSEurofirst 300 was up 0.7 percent, as buoyant pharmaceutical shares eclipsed a drop in cyclical mining and industrial sectors.

Earlier, Japan’s Nikkei average climbed 1.7 percent to close out its best week in a month.

The U.S. dollar regained traction against major currencies after early losses. The euro lost 1.8 percent to $1.2656 . The dollar was flat at 95.36 yen .

Benchmark 10-year Treasury notes traded higher in price for a yield of 2.9673 percent. The benchmark yield, which moves inversely to prices, fell to as low as 2.82 percent on Friday, according to Reuters data, marking the lowest in at least five decades.

Overall, benchmark yields are on track for the biggest monthly fall in at least 12 years, according to Reuters data, as investors have stampeded into lower-risk investments on signs of ever-deepening economic distress. The 10-year yield has shed more than a full percentage point since the end of October.

Euro zone government bonds rose, reflecting concern about the economy and expectations of interest rate cuts. Two-year Schatz yields were last down 3 basis points to 2.202 percent.

By Nick Olivari
NEW YORK, Nov 28 (Reuters)

U.S. stocks slipped in thin holiday trade on Friday after a streak of gains as investors nervously eyed post-Thanksgiving sales to gauge how retailers will fare this holiday season, while worries about global demand hurt technology and energy shares.

Chevron (CVX) fell 1.9 percent tracking oil lower as OPEC gathered to discuss potential further supply cuts to combat falling demand. U.S. crude dropped below $53 a barrel.

Technology shares slid after signs of a downturn in global chip demand as STMicroelectronics cut its fourth-quarter outlook. Industry sources said Taiwan companies want to slash costs. The semiconductor index shed 1.1 percent.

The U.S. stock market was closed Thursday for the Thanksgiving holiday and is trading for half the day on Friday. On Wednesday, stocks ended higher, capping the Dow’s biggest four-day percentage gain since 1932.

Stores across America hope to ring in billions of dollars in holiday sales beginning on the “Black Friday”, the day after Thanksgiving. But retailers fear a looming recession and mounting job losses could cost them dearly during the period that brings in up to 40 percent of annual sales.

“It’s a light volume day so you’re going to see some choppy trading, with so many people out,” said Robert Finkel, consumer trader at Stifel Nicolaus in Baltimore.

“I’m watching how things go from a retail standpoint today – we’ve heard a lot of speculation about how bad it’s going to be, now we’ll get some proper feedback.”

The holiday weekend will test the strength of consumer sentiment, a main driver of the U.S. economy, as the country faces its worst financial crisis since the Great Depression.

The Dow Jones industrial average fell 2.39 points, or 0.03 percent, to 8,724.22. The Standard & Poor’s 500 Index was down 2.39 points, or 0.27 percent, at 885.29. The Nasdaq Composite Index shed 14.26 points, or 0.93 percent, to 1,517.84.

The S&P’s retail index dipped 1.6 percent.

Chesapeake Energy Corp (CHK) fell 14.7 percent to $17.26 after a shelf offering to issue up to 50 million shares.

U.S. aluminum company Alcoa Inc’s (AA) fell after an executive said the company is not actively seeking to raise its stake in miner Rio Tinto Ltd (RIO) .

There is no U.S. economic data due on Friday nor any major companies scheduled to report earnings.

For the month, the Dow is down more 6 percent, the S&P 500 down more than 8 percent and Nasdaq down 11 percent.

By Kristina Cooke
NEW YORK, Nov 28 (Reuters)

Agora Financial’s 5-Minute Forecast reports that “in terms of major stock indexes around the world… there are few places to hide. The Euro Stoxx 50, a gauge of the big indexes in the eurozone, is down 24% this year. Germany’s DAX has fallen 20%. The CAC in France is down 22%. Britain’s FTSE is doing the ‘best,’ down 15% YTD.”In case you were wondering, the MSCI Asia Pacific Index is down 13% since the beginning of the year, the Shanghai Composite is down around 50% this year, Indian markets have fallen about 40%, Japan’s Nikkei 225 is down 12% year-to-date, Australia is down about 16%, Germany is down 20%, India down 32% and China is down 48% YTD. To name a few.

And, closer to home, the S&P 500 is down about 15% year-to-date, and the Dow is off about 14%, which when coupled with the ugly fact that they dollar is down about 7%, means that foreigners are getting whacked harder for investing in America than Americans! And I thought Americans were stupid! Hahahaha!

The Bank for International Settlements figures, “The current market turmoil in the world’s main financial centers is without precedent in the postwar period. Given the possibility of such a worsening economic and financial environment, it would not be surprising if asset valuations also came under further pressure,” made worse by an “uncomfortably long period of high inflation, along with slower growth.”

This is pretty gloomy news, which may explain why the latest survey of consumer sentiment from Reuters/University of Michigan fell to 56.4 in June, which shows that Americans are the gloomiest since 1980. And for good reason, too, as inflation in prices is going to keep getting higher and higher, because inflation in prices always follows inflation in the money supply, and money just keeps getting created by the idiot central banks of the world by the literal ton every day, as we learn from Ty Andros of TedBits newsletter, who gives us the Ugly, ugly News (UUN) that “The AVERAGE amount of M3 central bank money and credit creation is simply astonishing. It is clocking in at an average annual rate of 23%. Yes, that’s right, 23%.” Doug Casey of the International Speculator newsletter is a little more conservative, and says, “All over the world, but especially in the U.S., currencies are being inflated radically; M3 is rising at about 18% per year.”

To show the horror of that, Mr. Andros notes that a 23% rise in the money supplies, “Using the rule of 72…means those money supplies in one form or another are doubling on average every 3.13 years.” I involuntarily pee in my pants! Doubling the money supply in three years! This is insane! We are freaking doomed!

In case you were interested in knowing if there were any countries that are not a bunch of dirtbag, fiat-currency, inflationist morons, the answer is, unfortunately, “no”. But Mike Hewitt of DollarDaze.org writes, “The Swiss Franc was the best-performing currency of the 20th century, losing only 80% of its value.” Hahahaha!

And it is all going to get worse, too, and people will get more angry, and some of them will remember that The Magnificent Mogambo (TMM) always said that elementary mathematics and history prove that the majority of stock market investors must always lose in the long run so that a small minority of investors can make some meager gains (sometimes), and this losing majority must also pay the rapacious Wall Street financial services industry huge, huge, HUGE sums so that fancy-suited sharpies can make a lot of money ALL the time by “managing” all that money and making a complete failure of it, and the sting is mostly felt because the losing majority must also pay the government lots of taxes and fees levied on all the various handlings of this money, and they will blame me, like it is my fault that simple mathematics makes it inescapably true, or that the stupid, socialist/communist/fascist way that they vote has created a ravenous, cancerous monster that is going to destroy us all by necessitating that the Federal Reserve keep creating all the money and credit that the government needs to borrow, and these “majority losers” will sue the living hell out of their little “financial planner” or “account executive” that told such a lying piece of stupidity!

In short, the biggest and most damaging lie of all is that everyone can retire on the money they “invest for the long term” in the stock market. It can’t be done. It is mathematically impossible. You will lose more in purchasing power (as central bank monetary inflation destroys the currency by printing enough to finance the higher stock prices) than you will ever net in gains, and so the best, absolute best thing that can happen to the majority of investors is that they will invest the equivalent of a whole pizza today to get back a half a pizza when they retire, instead of merely a tenth of a pizza, if that! Hahaha!

Such are the just desserts of people stupid enough, with a media stupid enough, with an educational system stupid enough, and a government both stupid and corrupt enough to create a boom with a fiat currency, and to actually make a bet with everything they have that such a preposterous monetary system will not go bust, although it has, 100% of the time in all of history when any other country full of people stupid enough, with a media stupid enough, with an educational system stupid enough, and a government both stupid and corrupt enough to create a boom with a fiat currency.

The good news is that the astute can succeed where all others fail by merely buying gold and silver the whole time that the government is doing this, which is the easy way (”The Mogambo Way (TMW)). And we all love it when it is easy!

Well, I do anyway. And since it is easy to stop here, I will.

Well, after I make a pitch for buying gold, silver and oil. Now I’ll shut up. Just remember what I said. Okay, now I’ll REALLY shut up.

Source: The Biggest Loser of Purchasing Power