Traders took advantage of a dollar rally in the prior session to sell on views the Fed will signal plans to maintain loose monetary policy well into 2010.

Currency investors are also bracing for G20 leaders to discuss rebalancing the global economy this week, a process that would almost certainly require a weaker dollar.

A document obtained by Reuters showed how Washington would urge G20 leaders to launch a new push this year to get debtor nations like the United States to save more and exporters like China, Germany and Japan to spend more.

“If you take the view that too much of U.S. growth has been domestically driven, the next logical step is to say an orderly decline of the dollar — it’s not in anyone’s interest to see a collapse — in many ways makes sense,” said Tom Fitzpatrick, chief technical analyst at Citigroup in New York.

“And at the end of the day, the U.S. has a zero interest rate policy and the highest fiscal deficit in peacetime while (foreign investors) are holding a lot of dollars, so the path of least resistance for the dollar is down,” he added.

The euro was up 0.8 percent at $1.4794 after options-related demand and strong Asian buying pushed it above $1.48 for the first time since September 2008. The dollar fell 1 percent to 91.09 yen and 0.9 percent to 1.0231 Swiss francs , near a 14-month low touched earlier.

Sterling rose 1.0 percent to $1.6375 while the New Zealand dollar surged more than 2.0 percent to a 13-month high after dairy exporter Fonterra raised its estimated payout to farmer shareholders. Fonterra accounts for some 7.0 percent of the New Zealand economy.

With no major economic data on the calendar, traders said $1.4825 may be the next target in euro-dollar, with many predicting an eventual move back to $1.50.

“Every time we get to a round number in euro-dollar, we’ll probably try to chip away on the way to $1.50. But for now $1.4825 is the next line in the sand, and then we’ll have to wait and see about $1.49,” said Steven Butler, head of FX trading at Scotia Capital in Toronto.

DOLLAR IN FOCUS AT G20?

European Central Bank Governing Council member Axel Weber said on Tuesday recent moves in currency markets were “not out of line” given the euro zone’s economic performance relative to other areas.

Some said this suggested the ECB was comfortable with the euro’s level and was a green light to push it even higher, especially in light of the U.S. proposals to put fixing global imbalances on the G20 agenda in Pittsburgh this week.

But others said there is still a risk of dollar bearishness engulfing the market and selling turning into a rout.

“A discussion at the G20 on currencies, and especially the dollar, is not only appropriate but essential, as this move could accelerate swiftly,” said Maurice Pomery, managing director at Strategic Alpha in London.

Sept 22 (Reuters)

Spot gold stood at $1,000.40 an ounce by 1459 GMT, versus $1,006.15 an ounce late in New York on Friday. U.S. gold December gold futures fell $8.30 an ounce at $1,002.00 on the COMEX division of the New York Mercantile Exchange.

Prices earlier hit their lowest since Sept. 15 at $995.50, some way off the 18-month high struck last week at $1,023.85. However, gold has gained some 13.5 percent so far this year.

Data on Friday showed speculators held a record net long position in the U.S. gold futures market for the week ended Sept.15.

Analysts said concern was growing on the extent of speculative positioning — buying to profit if the price rises — in the market, as that left gold vulnerable to sharp corrections if currency fundamentals moved against it.

“The market is a bit wary of adding new longs after the highs of last week,” Standard Bank analyst Walter De Wet said.

“Given that the spec positions in all of these metals is really very high, without substantial dollar weakness we won’t move much higher,” he added.

Analysts also said selling pressure from the physical market had weighed on bullion, setting back the quest to strike record highs above $1,030.80 an ounce — the level hit in March 2008.

IMF GOLD

The dollar rose broadly, extending its pullback from a one-year low against the euro . On Friday, IMF member countries formally endorsed a plan for strictly limited sales of 403.3 tonnes of gold from its stockpile but said sales would be done in a way that did not disrupt gold markets.

“Central banks, including China’s, could acquire the gold at lower prices via the market. However, this is likely to be market-adverse on the whole, even if the sale takes place over several years and in a way that will not disrupt gold markets,” Commerzbank said in a research note.

On Monday, Market News International reported that China is considering buying gold being offered for sale by the International Monetary Fund, citing two unnamed government sources, but the report could not be confirmed and traders said it had little lasting impact on the market.

While concerns about speculative positioning remain, most analysts agreed that upside momentum was still intact, with long-term inflation fears still stalking investors.

“People are taking a bit of a breather ahead of the FOMC and G20, that’s all,” said Simon Weeks, director of precious metals sales at Bank of Nova Scotia.

The Federal Open Market Committee is likely to hold rates steady at the meeting, which starts on Tuesday but markets want to know if there are signs that the super-accommodative policy stance will be wound back, given a pick up in economic data.

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust , said its holdings stood unchanged at 1,086.479 tonnes on Sept. 18.

In other metals, silver fell to $16.80 an ounce, in line with gold, compared with Friday’s $16.96.

Palladium stood at $294.50 an ounce versus $299.50 an ounce on Friday. It hit $304 an ounce last week, its highest since end-August 2008. Platinum fell to $1,312 an ounce compared with $1,327.

Sept 21 (Reuters)

But prices remained rangebound as traders awaited clearer direction from the currency markets.

Spot gold was bid at $941.80 an ounce at 1523 GMT, against $943.55 an ounce late in New York on Tuesday. Earlier it rose as high as $949.85.

U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange were down $1.8 at $944.20 an ounce.

“We are probably going to stay fairly rangebound,” said Standard Bank analyst Walter de Wet. “We would have to see some decent dollar weakness for gold to move above $956-960.”

The dollar rose versus the euro and a currency basket, reversing early losses, after durable goods numbers from the United States.

The data showed June orders for durable goods, excluding transportation, rose less than forecast despite overall orders posting their largest advance since July 2007.

The report, however, was tempered by data showing a jump in U.S. new home sales last month that fuelled some selling in the dollar versus the euro.

U.S. stocks advanced after they July new home sales data, while European stocks gave up early gains to fall by early afternoon.

Demand from buyers of physical bullion remained sluggish as buyers awaited further price falls.

“Physical demand has dried up, but we are expecting more buying around $930-925,” said Commerzbank senior trader Michael Kempinski.

The world’s largest exchange-traded fund, the SPDR Gold Trust , said its holdings fell another 4.58 tonnes on Tuesday, bringing its total outflow to 21.4 tonnes in the last four weeks.

LONDON ETF HOLDINGS RISE

But London-based ETF Securities said it saw the biggest ever one-day inflow into its ETF Physical Gold product on Aug. 25. Its holdings rose 211,500 ounces to 3.190 million ounces on Tuesday.

On the supply side, the Russian Gold Industrialists’ Union reported a 21 percent rise in gold output from Russia, the world’s fifth largest producer of the yellow metal, in the first seven months of the year.

Platinum received an early fillip from a strike at Impala Platinum’s Rustenberg mine in South Africa, where workers rejected the company’s latest pay offer on Wednesday.

Prices rose as high as $1,249.50, but later eased to $1,233 an ounce from $1,239 as investors took profits. “The price of platinum reacted only marginally to the news,” said Commerzbank in a note.

An Implats spokesman said more than 20,000 workers were involved in the strike, ignoring a weekend call from the National Union of Mineworkers to suspend the action.

Separately, Aquarius Platinum said contract workers at its Kroondal and Marikana operations in South Africa had launched a strike.

Palladium was at $283 against $286. Silver was at $14.24 an ounce against $14.24.

Aug 26 (Reuters)

Spot gold was bid at $935.10 an ounce at 1325 GMT, against $933.30 an ounce late in New York on Thursday. It earlier hit a session high of $939.65. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange edged up 50 cents to $935.40 an ounce.

The euro gave up ground against the U.S. currency after data released on Friday showed the U.S. economy contracted at a slower-than-expected pace in the second quarter, which analysts said backs views the recession is winding down.

“The U.S. GDP data was fairly good; it is still contracting but at a much slower pace, much better than the first quarter,” said Andrey Kryuchenkov, an analyst at VTB Capital.

“But the personal consumption data wasn’t so good,” he added. “Inflation is not there yet, that would weigh on gold.”

Gold is broadly tracking moves in the dollar within a narrow range. Dollar weakness tends to benefit gold, as it makes the metal cheaper for holders of other currencies.

The dollar fell versus a basket of currencies in earlier trade as a rise in stock markets sharpened appetite for currencies seen as higher risk.

But equity markets fell in Europe and stock index futures weakened in the United States after the data, which also showed the economy contracted more than previously reported in the first quarter of the year.

Oil prices also fell more than 2 percent as investors worried about demand weakness. Strength in crude can benefit gold, which is often bought as an inflation hedge.

DEMAND TAILS OFF

Underlying demand for gold remains weak, with a pick-up in sales in leading gold market India midweek tailing off towards the weekend and flows into gold-backed exchange-traded funds still stagnant.

But a World Gold Council official told Reuters India’s gold demand may pick up from August as pent-up demand is seen boosting sales.

Meanwhile Africa’s top gold producer AngloGold Ashanti said it will miss its output target for the year, adding that it will wind up its hedge book of forward sales by 2014.

Elsewhere silver was flat at $13.45 an ounce, platinum was at $1,184.50 an ounce against $1,179.50, and palladium was at $255.50 against $256.50.

Aquarius Platinum Ltd said on Friday its quarterly attributable production was up one percent from the previous quarter to 98,258 ounces.

Prices of platinum — consumed primarily by the car industry for use in catalytic converters — edged above $1,200 earlier this week on hopes economic stability would lift car demand.

But despite an expected fourth-quarter recovery in the European car market, analysts were cautious towards platinum.

VM Group analyst Matthew Turner said a third-quarter demand slump in Europe, a key market for platinum as its cars are usually diesel-fuelled and therefore use a higher proportion of the metal in their autocatalysts, could hurt prices.

“In the last few months car production has started to pick up again,” he said. “The problem is that a lot of the car sales in Europe are artificially boosted by government incentive schemes. That is probably bringing demand forward, it’s not increasing demand.”

LONDON, July 31 (Reuters)

This from Dan:

It seems pretty obvious, that for the last ten years anyway, selling stocks and buying gold would have been a good trade/strategy. Stocks ended an 18-year bull market in 2000 and gold ended a 20-year bear market. One asset class was at a cyclical low. The other was at a cyclical high. In fact, you might even say that one was at a generational low and the other was at a generational high.

Gold is no longer as low as it once was. But it’s still not as high as we expect it to go before it starts to look foolish. Meanwhile, today’s government bond market looks an awful lot like the stock market circa 2000. You’re seeing a generational high in bonds. It’s another version of the “high-low” strategy.

This time around, though, we would add energy stocks to the mix, along with gold. Crude oil climbed to an eight-month high over $70 on Tuesday. Bloomberg says the weakness in the US dollar is, “bolstering the appeal of energy as an alternative investment.” Sell bonds, buy energy. Pretty simple.

There is probably some truth to the fact that oil’s latest move is driven by investment demand more than, say, demand growth in the real economy. But investors ARE looking for ways to profit from US dollar weakness. Oil is liquid and popular. In the long-run, it’s the smaller-than-expected oil supply growth that will drive the market.

TheDailyCrux.com editor Sean Goldsmith says one way to play commodities this year is buy going long natural gas. That’s because according to a recent Bloomberg survey natural gas prices will rise 38% this year…

Natural gas’ 31% decline in 2009 makes it the year’s worst-performing commodity. And it’s the cheapest compared to oil since the Soviet Union collapsed in 1992 and Russian supply plummeted.

Gas is down 72% in 11 months as the recession destroyed demand and drillers failed to idle rigs fast enough to contain supply. Today, stockpiles are 22% higher than the five-year average. And oil costs 18 times more than gas.

Now, the drillers are finally slowing production… Just as the economy is showing signs of strength. The number of rigs dropped 56% in the past nine months – the most in two decades – to around 700. According to Bloomberg analyst surveys, natural gas prices will rise over 38% this year.

There may be money to be made in stocks right now. However, before jumping in consider the following facts (which we’ve plundered from yesterday’s Daily Reckoning):

1) Unemployment has risen to 9.4 million, according to heavily doctored “official” Bureau of Labor and Statistics figures. In reality, the number is much higher. People without jobs don’t spend money. They also rely on handouts from the government. One in every six dollars of personal income in America now comes in the form of federal aid.

2) Housing prices have so far been knocked down 32% since the slump began. Housing expert and Yale economist Bob Shiller reckons we’re a long way off from a recovery. People with mortgages whose house prices are falling don’t have room for discretionary spending – the kind of spending that helped keep US GDP in positive territory for so long.

3) Defaults and foreclosures aren’t confined to the subprime part of the mortgage market. Prime and Alt-A mortgages are now under severe pressure. The contagion is spreading. And it will continue to spread thanks to record job losses and the contraction of credit.

4) The resulting fallout in consumer spending is impacting production. This is evident from the severe fall-off in the transport sector. Traffic in the trucking sector is down 13% year on year – the biggest drop in 13 years. Airlines are carrying 21% less cargo. Cargo rates are down a whopping 90% in shipping.

We could go on… and on… But you get the point. As least we hope you do. The plunge in the economy may be slowing, but the data points are still heading in the wrong direction. Until this changes, we don’t fancy our chances in stocks.

We’re conservative that way: we like to have a reason for investing other than “everybody else is doing it, so it must be right.” That attitude will get you killed. You may make some money on the way to the chopping block. But sooner or later your head will still end up in a basket.

Of course, a bet on stocks right now is a bet on inflation (although not necessarily a good one). This is where the plot thickens, as a good plot always does.

We suspect the reason traders and investors are ignoring economic fundamentals in their flight from relatively safe-harbor investments (think Treasurys) into stocks is because they’re counting on the Fed flooding the economy with liquidity.

As we’ve discussed before, stocks tend to be particularly sensitive to fiscal and monetary stimulus. The problem is such overwhelming stimulus is likely to make the currencies stocks are valued in worthless.

There are better ways to bet on inflation – ways that also allow you to benefit from currency dollar devaluation. At the risk of repeating ourselves, there are two easy ways to do this.

You can go long the SPDR Gold ETF (NYSE:GLD), which has been on a tear since mid-April.

Or you can go long the PowerShares DB Agriculture Fund (NYSE:DBA), which has also been a great performer since mid-April.

Markets make opinions… even of Federal Reserve chairmen:

The Throwback Bernanke: Made W/Real Cane Sugar

“I think we are in much better shape than we were in September and October,” Mr. Bernanke testified yesterday, often speaking in a manner that, gulp, even a congressman could understand. That the S&P 500 had just inched positive for the year provided ample cover for the chairman’s tepid confidence.

“The pace of contraction may be slowing,” he added, riffing on the “glimmers of hope” theme offered by the Obama White House 3 weeks ago. “We continue to expect economic activity to bottom out, then to turn up later this year.”

And inflation? The chairman says he’s on it: “I just want to assure the American people that we are very focused, like a laser beam . . . on this issue of the exit and of making sure that we have price stability in the medium term… we understand the necessity of winding this down in an orderly way at the appropriate moment so that we will not have inflation problems on the other side.

“Our forecast is still for inflation to remain quite contained for the next couple of years,” he assured Congress. There’s really no need to worry… until it becomes a crisis (which it likely will, considering his forecasting history).

The Dow, responding in kind, opened up 1% this morning. Following minor losses yesterday, the market turned positive after the ADP jobs report hit the wire this morning. More on jobs in a moment…

But first, let us remind you, history shows this rally still has room to run:

The current rally is smaller — in order of magnitude and duration — than the average Great Depression rebound. Should history rhyme, we still have another 5% to the upside and more than 20 days to go.

Here’s the “money” lesson: Despite five rallies from 1929-1932 that exceeded 15% — including the doozy that soared almost 48% — the Dow fell from 300 to 60 over the same period. That’s an 80% crash.

Caveat emptor.

“875 is the number to watch on the S&P 500,” notes Wayne Burritt, architect of Easy Money Options “Because the market reversed course to the downside Feb. 9 and at that level (875) that peak is called — in technical parlance — a ‘resistance’ level.

“The market also failed to penetrate this resistance level just a few trading days earlier, on Jan. 28. All told, that means 875 is a pretty tough point for the market to get above. That’s why the market’s most recent action is more significant than most investors and traders are thinking: It smashed above key resistance at 875 like a walk in the park. No doubt about it, that shows uncommon technical upside strength.

“Here’s the best part: When the market breaks through resistance — especially after failing to do so in previous attempts — that resistance level has an excellent chance of becoming a stopping point when the market decides to turn down again.

“In other words, strong resistance — once defeated — becomes solid support for future price action. So when the market pulls back — and it surely will — it’s very likely to not fall too much below 875.”

And if the S&P 500 fails to find support at 875? All bets are off. If you’re looking to trade the swings, be sure to check out Wayne’s recommendations… here.

Whatever happens in the stock market, the economy has a lot of wreckage to sort through yet. For example, a study released today from Zillow.com reveals 21% of American homeowners owe more than their homes are worth.

Incredible, eh? One out of five homeowners is “underwater.” That’s 21 million people losing sleep at night wondering if they’re going to make it through this market.

“A combination of falling prices and low down payments has left many borrowers underwater,” said Stan Humphries, a Zillow VP. He noted that some markets in Nevada and California have “more than half of all homes in negative equity.”

Las Vegas takes the prize — a stunning 67.2%.

And manufacturing is still a mess. The economy will contract for all of 2009, forecasts the ISM today, parrying Bernanke’s late-year recovery.

The thrust? The semiannual purchasing managers outlook predicts a 14% drop in revenue for the manufacturing sector. And 5% for service businesses. Compared with the most recent survey, that’s a disaster. In December, managers expected a 1% fall in 2009 revenues.

Both sectors can expect employment to drop for the rest of the year.

Indeed, the U.S. private sector lost 491,000 jobs in April, the payroll manager ADP reports today. Since the Street was braced for a 645,000… that’s not bad. Compared to March’s 708,000 loss, half a million almost feels encouraging.

Employment for people who actually “make things” things doesn’t look so good. Manufacturing dropped 159,000 jobs — the 38th consecutive month of net losses. Construction shed 95,000, a net loss for the 27th straight month.

The Labor Dept. is expected to report up to 630,000 job losses in April on Friday, with official unemployment rising to 8.9%.

Bank of America is hogging the spotlight again. An unnamed exec there told the press that BoA has essentially failed the government’s “stress test.” Bank of America, apparently, needs another $34 billion in capital to stay afloat.

Naturally, shares of BOA opened up almost 10% this morning.

And if you thought this stress test business wasn’t gaudy enough, perhaps the “debt test” will do it for you.

Any bank wishing to pay back TARP loans money will likely have to undergo a “debt test,” the Treasury Dept. leaked today. Essentially, a bank will have to prove that it can find a market for its bonds without an FDIC backstop, one of the benefits of being under TARP protection.

Heh. The moment they put their hand out… willfully or not… these banks were doomed. No bank will be able to simply “give the money back”… are you kidding? Ha! There will be tests, favors, takeovers, back-scratching, bribes and at least one new scandal. Wonderfully entertaining fodder for The 5… not such great news for the credit markets.

The dollar continues to dwindle today. After a brief rally late yesterday, the dollar index is back below 84 this morning, thanks mostly to puffery in congressional testimony.

Still, right now, “the Aussie is leading the way,” notes our currency man Bill Jenkins. Indeed, the down under currency is up about 15% from March lows — a 10-cent jump against the greenback, to 74 cents.

“Just yesterday, we locked up 76% profits (and climbing) on the back of the Australian dollar. I’ve been pitching this idea for weeks, which gave all our readers plenty of time to get on board. As major currencies devalue themselves, the only ones that will have any value are the currencies of countries that efficiently produce useable, and, hence valuable, commodities.

“Money as we know it in the major currencies will become worth less, and the only currencies to increase in value will be those that are holding valuable goods! Unfortunately for most U.S. citizens, the U.S. dollar will no longer be considered a valuable commodity.

“Watch the appreciation of the commodity dollars, or ComDolls, with the weakening of the U.S. dollar. But don’t wait too long for your chance to profit!”

Gold is holding steady just below yesterday’s high. The spot price rings in around $908 as we write.

After a hefty rally yesterday, oil is pushing even higher today. Light sweet crude is up another buck, to $55 and change — a new new high for 2009. These days, as stocks go, so does the black goo.

“The fact that China is going to have a lot of new cars on the road over the next decade probably does not surprise you,” notes our value maestro Chris Mayer. “China has about 35 million cars on the road today. McKinsey Global Institute estimates that China will have 120 million cars by 2020.

“What may surprise you is that China recently adopted fuel-efficiency standards for vehicles that are even stricter than in the U.S. currently. And what may surprise you even more is that methanol is the main alternative fuel. Think of it as the Chinese ethanol.

“Methanol is a clear liquid alcohol made mostly from natural gas, though China makes methanol using coal. China produces and uses more ethanol than anybody else. The main use is to blend methanol in gasoline. Already, taxi and bus fleets in China run on high-methanol blends. And retail pumps also sell low-methanol blends, similar to the way U.S. gasoline stations have low-ethanol blends.

“Even though China makes a lot of methanol and is adding more capacity, it still imports methanol. As you can see from the nearby chart, Chinese imports have climbed recently.

“It is good to sell what the Chinese need. And their capacity is on the high-cost side of the spectrum. Prices for methanol in China are the highest in the world, at $240-250 a ton. In the latest issue of Capital & Crisis, I recommended readers buy the world’s largest producer of methanol, which also happens to be the low-cost producer.”

Not a subscriber? C’mon… this pick alone is worth the price of admission. Get details, here.

“So one of your readers is just fine with China controlling the world’s rare earth metals as opposed to our ‘cowboys,’” writes a reader, clearly peeved with yesterday’s inbox. “Said reader must be a little short on the last 40 or so years of Chinese history. Does the Cultural Revolution circa 1969 or Tiananmen Square 1989 ring a bell?

“No?

“Freedom of the press is not very big over there, so maybe you did not notice it, but they have no problem killing thousands to millions of their own citizens as they see fit. I’m sure Americans are not even that high on their list.”

“Addison,” writes another, “in my lifetime, the Chinese have conquered five sovereign nations and destroyed their individual and democratic rights. The Chinese are building their military up about as fast as it’s possible to build a military. And they’ve been doing it in part through industrial espionage using the computer and Internet technologies that Americans invented — so I have to take issue with the notion that all we’re good at is making bombs.

“Who believes that stuff?

“I’m with you on Bush, but the Obama presidency is making me downright nostalgic. In an imperfect world, you have to recognize and choose the lesser of evils. The anti-war crowd doesn’t seem capable of that sort of choice, so they put us in the same category as China — which has killed at least 30 million of its own people in my lifetime, while supporting the North Korean slave state and destroying Tibet, Mongolia, etc. That’s a view that is offensive to the vast majority of Americans and, I would bet, the Agora readership.”

“To your reader,” writes the last, “who detests the ‘delusional, slobbering cowboys in our military,’ perhaps he/she should consider going and living in a country such as China or Iran that doesn’t have those big bad bombs he’s so concerned about. If he/she had a brain in his/her head, he/she would realize that it is EXACTLY those big bad bombs and weapons that have kept the wolf away from our door — at least so far. Pinheads!”

The 5: Perhaps, you’re right. Unfortunately, the damage the Bush administration did — while paying lip service to free markets and liberty — breeds this kind of skepticism. I suppose I should be less flippant about it…

Source: Bernanke & Inflation, Why the Rally Might Continue, A China Play and More!

• U.S. Federal Reserve Chairman Ben Bernanke said the U.S. economy will begin to “turn up later this year,” contingent upon the financial sector’s continued improvement, Reuters reported. Speaking to a congressional committee, Bernanke said the housing market may be bottoming out and pointed to improving consumer spending.

• The Canadian dollar hit its highest point since November. “The market is now willing to embrace risk and move clean of the safety associated with the U.S. dollar,” Stewart Hall, an economist in Toronto at HSBC Securities, told Bloomberg. “The Canadian dollar has the potential to be a high-yielding currency if the commodity story once again gains traction and moves forward.”

• Price increases and cost-cutting measures helped Kraft Foods Inc. (NYSE: KFT) post higher-than-expected first-quarter profit. The food company also reaffirmed its 2009 earnings and revenue forecast, Reuters reported.

• South Africa’s unemployment rate jumped to 23.5% in the first quarter, as Africa’s largest economy likely slipped into recession for the first time in 17 years, Bloomberg reported. “Manufacturing and mining are under strain, and we can expect these numbers to worsen,” Fanie Joubert, an economist at Efficient Group, told Bloomberg. “We’re unlikely to see a recovery until the fourth quarter.”

• The U.S. service sector is beginning to show signs that the worst may be behind it as the Institute for Supply Management’s index of non- manufacturing businesses contracted less than forecast in April.  The index of service businesses, which make up almost 90% of the economy, rose to 43.7 from 40.8 the prior month, according to the Tempe, Arizona-based group. Readings below 50 signal contraction. Separately, a survey of chief executives found the highest level of confidence in three years, as home purchases and retail sales rose, another signal that the economic slump is abating, Bloomberg reported.

• Shares of American International Group Inc. (NYSE: AIG), once the world’s largest insurer, rallied in New York trading yesterday (Tuesday), on speculation the insurer’s first quarter loss narrowed from its record $61.7 billion net loss in the fourth quarter, Reuters reported. AIG, was rescued with a taxpayer lifeline last year after severe mortgage losses left it unable to meet collateral postings with counterparties. It currently needs to pay back about $80 billion in borrowings from the U.S. Treasury and Federal Reserve.

• Several Wall Street traders and mutual funds, including Fidelity Investments and General Electric Co. (NYSE: GE), oppose bringing back the so-called “uptick rule,” which may deter U.S. regulators from resurrecting the provision, Bloomberg reported.  At a public meeting in Washington, several executives from companies that blame short-sellers for driving down share prices said they prefer an alternative to the uptick. The Securities and Exchange Commission scrapped the almost 70-year-old uptick provision in July 2007 after studies determined it wasn’t relevant in markets dominated by fast-paced electronic trading. SEC Chairman Mary Schapiro said any new rules will uphold the benefits of short-selling while restricting market abuses.

• Chile’s peso firmed to a seven-month high yesterday (Tuesday) on dollar weakness and better-than-expected domestic growth data. “The main elements that influenced the peso…were the fall of the dollar against the euro, and also the economic data, which was negative, but better-than-expected,” one currency trader in Santiago told Reuters. The peso is now up 12.2% against the dollar year to date after slumping 22.3% in 2008.

Source: Investment News Briefs Wednesday, May 6, 2009

]]> http://www.contrarianprofits.com/articles/investment-news-briefs-wednesday-may-6-2009/16296/feed 0 http://www.contrarianprofits.com/articles/global-investment-news-briefs-friday-april-3-2009/15432 http://www.contrarianprofits.com/articles/global-investment-news-briefs-friday-april-3-2009/15432#comments Fri, 03 Apr 2009 12:12:16 +0000 William Patalon III http://www.contrarianprofits.com/?p=15432 February Factory Orders Turn Positive; Fixed Mortgages at Record Low; GM Seeks Gov’t Money For Hybrids; Chile: Copper Prices Heading North; IBM Lowers Bid for Sun; Oil Surges 9% on Dollar Weakness

• U.S. factory orders rose in February, reversing six months of consecutive declines, the Commerce Department said. New factory orders rose 1.8% in February after dropping a revised 3.5% in January, Reuters reported.

• The 30-year fixed-mortgage rate dropped to 4.78%, a 30-year low, as the U.S. Federal Reserve increases its purchases of mortgage-backed bonds, Bloomberg reported. “Lower rates will help increase demand for homes. We need to see stronger demand for homes to help end the housing correction,” Celia Chen, senior director at Moody’s Economy.com told Bloomberg.

• Seeking funding to develop three…

Platinum touched its highest in six months as dollar weakness over the past couple of days prompted industrial and bargain-hunting buying, lifting palladium by nearly 6 percent to its highest in over four months.

But analysts said with sales sharply down in the auto sector, the main consumer of platinum, the rally lacked fundamentals to support it and was seen short-lived.

Spot gold rose to $938.00 per ounce at 1541 GMT, up from $933.15 an ounce late in New York on Wednesday. Oil hit its highest in four months while copper surged 3 percent.

“Money keeps pushing into commodities on concerns over the money supply in the United States,” said John Meyer, head of resources at Fairfax. “Gold is a popular place to be right now.”

Gold is used as a hedge against financial uncertainty and against inflation, which is expected to soar because of the vast amounts of money being piped into the global economy by central banks and governments.

The U.S. plan to buy long-dated Treasuries further raised those inflationary concerns and have also dented the outlook for the dollar, which in turn is supportive for bullion.

But on Thursday, the dollar was up against the euro , but trade was volatile. After earlier falls, it was up 0.28 percent against a basket of major currencies

NO BOUNCE IN CONSUMPTION

The U.S. economy contracted slightly more than previously estimated in the fourth quarter, pulled down by falling consumer spending and exports, while corporate profits plunged by the biggest margin since 1994.

With this gloomy picture of the world economy and the automotive sector among the hardest hit, analysts see little change to the grim fundamentals for platinum.

“There seems to be every week an announcement of carmakers cutting production. I can’t really see any positivity on the consumption side,” David Wilson, director of metals at Societe Generale, said.

Spot platinum touched $1,159.00 an ounce, its highest since Sept. 26 and was last at $1,1149.50 an ounce versus $1,120 an ounce late in New York on Wednesday.

“The euro being stronger against the dollar has encouraged some industrial buying,” said Commerzbank trader Rory McVeigh, referring to the dollar weakness over the last couple of weeks. “Not much but enough in a very thin market to lift it.”

Platinum’s strength lifted sister metal palladium nearly 6 percent higher to $226.50 an ounce, its highest since Nov. 11. It was at $220 an ounce versus Wednesday’s $208.50 an ounce.

Spot silver firmed to $13.66 an ounce from Wednesday’s $13.45 an ounce.

The poor state of the global economy has boosted investment appetite for gold since the start of the year, with holdings in the world’s largest exchange-traded fund hitting consecutive record highs.

But analysts said the pace of the rise was beginning to slow. “Demand for investment gold is still there, but relatively slower over the last couple of days,” Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus, said.

The SPDR Gold Trust , said its holdings remained at 1,124.99 tonnes on March 25, unchanged from the record hit the previous day.

March 26 (Reuters)