Oil fell more than $2 towards $34 a barrel on Monday after Russia and Ukraine signed a 10-year gas deal clearing the way for the resumption of supplies to a freezing Europe.

Implementation of a ceasefire between Israel and Hamas in Gaza also eased supply concerns as the market remained under pressure from expectations that the weakening global economy would erode oil demand.

“Right now the economy is dominating,” said Harry Tchilinguirian, analyst at BNP Paribas. “The market is very volatile and the signs are that demand is weakening.”

U.S. crude oil futures for February delivery dipped to a low of $33.89, down $2.62, before recovering to trade at $34.53 by 1800 GMT.

Traders said the February U.S. crude oil futures contract, which expires on Tuesday, also fell because of very high stocks at the delivery point for the U.S. futures contract.

Only just over 3,100 lots were traded on the February U.S. crude contract. The March contract was much more active as more than 31,000 lots changed hands.

London Brent crude for March fell to a low of $43.80, down $2.77, before edging back up to around $44.50.

GAS FLOWS

The agreement between Russia and Ukraine, which set a final price for 2009 supplies, is expected to lead to the restart of flows of Russian natural gas to Europe via Ukraine within the next 36 hours.

Also easing concern about energy supplies, Israeli forces began to pull out of the Gaza Strip following a tentative truce with Hamas after the three-week war, easing tension in a region which pumps about a third of the world’s oil.

Prices came under pressure on Friday after the International Energy Agency, an adviser to industrialised countries, predicted a fall in world oil demand in 2009.

OPEC, the oil exporters’ group, has cut production three times since September to try to stem falling prices. It might consider reducing output again, Algeria’s oil minister Chakib Khelil said on Saturday.

Oil has collapsed by more than $110 a barrel since reaching a record high of $147.27 a barrel in the summer as the global economic slowdown has eroded demand and consumer spending.

Still, some in the oil market think there is little room for prices to fall much further.

“It looks as if Brent will hold in the current $40-$50 range,” said Christopher Bellew, a broker at Bache Commodities. “I do not anticipate new lows.”

LONDON, Jan 19 (Reuters)

Oil prices slipped towards $41 a barrel on Friday as economic gloom deepened ahead of data expected to show a big jump in U.S. unemployment.

Non-farm payrolls figures, due at 1330 GMT, are likely to show more than half a million Americans lost their jobs in December, a Reuters poll showed, the highest monthly job losses in 34 years.

U.S. crude for February delivery was down 65 cents at $41.05 a barrel by 1149 GMT, after climbing $1.00 to $42.70. London Brent crude was 43 cents lower at $44.24.

Crude fell 2.2 percent to settle at $41.70 on Thursday, after a 12 percent slump on Wednesday, the biggest daily percentage drop in more than seven years.

“Of course, we are getting used to negative economic news, but this U.S. jobs data is likely to be very, very bad,” said Frank Schallenberger, head of commodity research at Landesbank in Stuttgart.

“Short-term, oil is held within a fairly narrow range between $40 and $45. I don’t see $50 in the near future.”

The market appeared to be largely ignoring evidence that oil producers were cutting output in an attempt to support prices.

Top crude exporter Saudi Arabia is the latest member of the Organization of the Petroleum Exporting Countries to show it is cutting output in line with a deal agreed in December.

It will deepen its supply cuts in February from January to at least three Asian crude buyers, industry sources said on Friday.

Earlier this week, Kuwait and Iran also told customers of bigger supply curbs this month, after the cartel agreed its biggest ever production cut in December in a bid to bolster prices.

One prop of the recent rally that had lifted oil prices since the start of the year looked likely to be removed, after Russia reached an agreement to deploy European Union monitors to ensure the smooth flow of gas via Ukraine.

The threat of widening supply disruptions in Europe from the Russia-Ukraine gas row, as well as Israel’s invasion of Gaza, had boosted oil to a one-month high of $50.47 on Tuesday.

While the Gaza conflict does not directly threaten oil supplies, Middle East unrest can bolster prices because countries in the region pump about a third of the world’s oil.

Oil has fallen more than $100 from a record peak of over $147 a barrel in July, as the global economic downturn hits demand for fuel. It settled at $33.87 a barrel on Dec. 19, the lowest level since Feb. 10, 2004.

LONDON, Jan 9 (Reuters)

As I explained yesterday, we could see some “book squaring” today, which, depending on which way the “squaring” was going could cause some additional wild swings. The Japanese yen, however, is set to book a performance in 2008 that is the best we’ve seen from yen, in 20 years! WOW! Shoot Rudy, that’s longer than I’ve been writing the Pfennig! Yes, 2009, will mark my 17th year writing the Pfennig… Just think it began with hand written notes, of which I still have every one, and has turned into a letter that is read by 100’s of thousands of people each day! WOW!

But let’s get back to yen… If yen is going well, and the dollar is going well against the other currencies, it tells me that Risk Aversion has slipped back into the markets on a larger scale, which makes sense to me, given the fighting in the Gaza Strip.

The “star” currency yesterday though, was the beaten down Brazilian real. We saw a 6 whole figure move in real yesterday… There was no news, so once again it was thin volumes causing wild swings!

We did see two pieces of data yesterday, in the U.S., that played well with the financial meltdown in 2008… First we saw U.S. Home prices fall 18.% in October, and 2.2% from the previous month! OUCH! The S&P/CaseShiller Home price index showed this 18% fall, which turns out to be a record drop! This, will continue for most of 2009 folks… There’s still just too much inventory out there to deal with, and now, even people with good credit are finding it difficult to get loans… That problem will lessen as we move through 2009, and eventually, this will all get back to normal, whatever that is!

The second piece of data was Consumer Confidence… The Consumer Confidence index came in much weaker than expected in December falling to 38.0 from 44.7 in November. This represented a record low reading for household confidence. The “experts” had thought that the fall in gas prices would give Consumer Confidence a boost… But that failed to become fact! This index is finally about where I believe it should be… Look, I DON’T WANT it to be this bad, I just think that finally people are looking around and have finally taken off the rose colored glasses!

OK… So, we’re heading to the end of 2008… I thought I would share with you some “Chuck Speak”… Thoughts from the Cheap Seats, as I think when I retire, I’ll call my newsletter! So… Here goes…

As we put the finishing touches on 2008, we’ve seen a nice Santa Rally in the euro and other currencies, especially the Swiss franc, will this continue or do we go back to the Trading Theme of rewarding the dollar as things get deeper, darker, and more dangerous?

Well… Here’s what I think… First of all, we could very well see a very nice “Obama bounce” in the first QTR of 2009, as he takes over. This would encompass stocks, and the dollar. But unfortunately, the “Obama bounce” will come to an end quickly, as a touch of reality comes over the markets about June… So, for the first 3 months, we have the “Obama bounce” and the “ding dong the witch is dead crowd” will be coming out of the woodwork. But, as I said, then a touch of reality comes over the markets, as the $1 Trillion stimulus plan is put through. Then we’ll probably see three months of capitulation before the trap door springs on the latest bubble… Treasuries…

More Treasury issuance will glut the market and soon, everyone will be heading to the EXIT door, panic setting in, as Treasury yields go higher and higher, and their bond values go lower, and lower. Why higher and higher? Well, two reasons… 1. there will be so much supply, that the yield will have to go higher to attract buyers of all this debt. 2. Inflation will be returning…

Yes, yesterday I gave you my theory on how the asset price deflation will end, and new buying will take place. Someone asked me a good question, “how will these people get the money to spend?” Well, you see, I’m not talking about the Mom and Pops in the investing world, I’m talking about the BIG BOYS, Institutions, Hedge Funds, Sovereign Funds… OK, so, then inflation sets in and now we’ve really got problems on our hands!

So… By June, we could very well be seeing a true and earnest return to fundamentals, and a much weaker dollar. Recall that when this current Credit Crisis caused dollar repatriation, I said that it could last through the election and on through year-end… Then I revised that, seeing the rot on the economy’s and Credit Crisis vine, to say that it could very well last one year, just like the last mini-dollar rally in 2005… So that would put us around June!

And that’s where the asset deflation probably ends too… So… I’ll trade today, and come back in May, eh? Nah… Just kidding, I’ve got to be here for the fireworks that will go off IF I happen to get lucky enough to have nailed this scenario!

You won’t get this scenario from anyone else folks… Most writers out there are talking about deflation setting in on the U.S. like it did Japan… And I know that I’ve spent a ton of time talking about the similarities between Japan, circa 1990’s, and the U.S. now… But I draw the line at deflation setting in for a decade like in Japan! We, the U.S. buyer, be it consumers or hedge funds, will be experiencing the 7-year itch to buy assets at depressed prices next spring… I just can’t see it any other way!

Currencies today 12/31/08: A$ .6875, kiwi .5760, C$ .8175, euro 1.3860, sterling 1.4590, Swiss .9375, ISK 145.50, rand 9.3850, krone 6.99, SEK 7.81, forint 190, zloty 2.9775, koruna 19.07, yen 90.50, baht 34.60, sing 1.4390, HKD 7.75, INR 48.80, China 6.8275, pesos 13.81, BRL 2.3325, dollar index 81.27, Oil $39.90, Silver $10.85, and Gold… $863.15

Source: The End of 2008!

Platinum pushed above $900 in Hong Kong and held above the mark all day, ending at $911/0z., up $20. Overnight, platinum has slipped lower.

Silver was in positive territory from overseas trading to the New York open, at which point it went vertical in the first half-hour, pushing past $11 to just above $11.20, but then fell sharply through the rest of the Comex before adding back a little on the Globex to close at $10.86/oz., up 20 cents. Overnight, silver is trending lower. (Click here for charts)

The precious metals started off the post-Christmas week in strong fashion, as gold especially gained off of its safe haven status in the midst of turmoil in Israel/Gaza and a looming showdown between Pakistan and India.

With Israelis massing tanks near the Gaza strip and calling up reservists, and Defense Minister Ehud Barak calling the action a war against Hamas, Kitco’s Jon Nadler commented that, “When a state of virtual or actual war is at hand, the world’s worried masses tend to turn to [gold,] the metal of ages.”

But all the metals gave back chunks of their early gains.

“The unfortunate circumstances in Israel and the Gaza Strip gave an early supportive role to the [metals] complex; however, these gains were slowly eroded through the day as the markets drifted on lackadaisical volumes,” wrote commodity analysts at Sucden Financial Research.

Trading is certain to remain thin as many traders take another week off or at least man their desks for only few days before the New Year’s break.

However, the bullish case continues to build.

“Aside from geopolitics, gold and oil are also boosted by a return to broadening U.S. dollar weakness, especially in the aftermath of last week’s jobless claims and personal consumption reports,” wrote Ashraf Laidi, of CMC Markets.

Source: Gold continues to push higher - Safe haven sought as international tensions increase

You can point to profit taking as the reason for the move, and with the volumes thinned out by Holiday trading, one profit taking sell begot another, and before you knew it, the euro was looking at a loss on the day.

But don’t despair, as the single unit has rallied back overnight. Back to the high 1.41 handle, in fact when I arrived it was 1.4205! Wild Swings… I keep saying Wild Swings and every time I type it I want to say Wyld Stallyns, the name of Bill and Ted’s band in their Excellent Adventure move… “Ted, while I agree that, in time, our band will be most triumphant… Hey! That’s righteous… Excellent!

OK, enough of that silliness… I had some guy tell me that I should stop the silliness and just report the news, that the silliness was making me look foolish… Well! If I couldn’t go off on these silly tangents then I wouldn’t write the letter! It’s what I do! It’s my style! It’s me! And I wouldn’t change a thing!

So, back at the ranch… The fighting in the Gaza Strip continued yesterday, and those fears of disrupted oil supplies to the U.S. are once again on the minds of currency traders this morning. You know, I said this a few weeks ago, and it needs to be repeated, especially now with these fears of disrupted oil supplies. Can you imagine what this whole recession and financial meltdown would look like if Oil had remained around $100 a barrel? The drop in the price of Oil would always be welcome at my house, but even more with the U.S. economy staring straight the nose of a .44 that has recession written all over it!

This collapse in the price of Oil has other consequences… For those of us that need gas for our cars the collapse is manna from heaven. But for the Canadian dollar / loonie, this collapse has been a shot to the mid-section, bowling over the loonie and leaving it in a fetal position on the canvas. Yes, the shot to the mid-section was that devastating for the loonie, but wait! That’s not all (why do I feel like Billy Mayes here?) The loonie also had to contend with falling interest rates and Commodity prices overall that collapsed… That’s one, two, three strikes you’re out at the old ball game!

But, I still think the loonie can improvise, overcome, and adapt, (to borrow a line from Clint Eastwood) once inflation begins to creep into the markets again.

OK, I can hear every mother say, “that’s not going to happen any time soon, Chuck”… Well, maybe not, but I can tell you this… U.S. Consumers might be turning into “savers” once again, but they won’t / can’t stay that way. It’s not in our blood! We bargain hunters, and let me tell you about the bargains that will be out there in all the assets that have suffered from asset price deflation! They will be at “can’t pass that up” levels, and the U.S. consumer will eat up those levels like kids eat up cake! And after all this recession has taken its toll on businesses, that have closed up or slowed production to snail’s speed, that’s where the inflation comes in… Money chasing not enough goods… Think about that…

That will also mean that the U.S. Fed will be behind the inflation eight ball once again, as they won’t see it coming, and will be so focused on getting out of the recession, that they’ll keep interest rates too low for too long once again, and that will speed the inflation rate along to high levels once again.

Well… That was quite the discussion, eh?

I saw a story by the Wall Street Journal talking about how Japan’s NIKKEI had fallen 42% this year… I wondered why did the WSJ pick on Japan? It’s not like the NIKKEI was the only stock market to suffer this year… A quick look at the roster shows the Dow down 36%, NASDAQ down 43%, and S&P 500 down 41%, the German DAX down 41%, the FTSE down 33%, and so on… Stocks had one very bad year… I don’t see that reversing any time soon either, folks. Globally, Corporations are going to be posting some very ugly returns in the 4th QTR, and that should show up in stock prices…

When we turn the calendar to 2009, the euro will be celebrating it’s 10th birthday! WOW! Has it really been that long already? In 10 short years, the euro has done things its creators never thought it could do in 10 years… To have gained 26% of the world’s currency reserves in 10 short years… To reach parity to the dollar and then move to 1.60 in 10 short years… To be within spittin’ distance of parity to the pound sterling in 10 short years… Europeans, even including those in Spain, which is one of the countries naysayers like to point to as one that will break away from the euro. 70% of the Spanish that were polled, believe the euro will overtake the dollar as the World’s reserve currency…

OK… Don’t know what those crazy Spanish are smoking, but you can’t complain about the euro, and the European Central Bank, and then promote the currency as the world’s reserve currency… I guess the rumors of Spain’s want to leave have been greatly exaggerated, eh?

Well, the Aussie dollar (A$) has found a base around 65-cents, and is knocking on the door to 70-cents… I would think that given Gold’s rise, 70-cents would be the top for now… But if Gold can take the next step to $900 and beyond, then the A$ will have support to move higher than 70-cents. And the A$’s kissin’ cousin across the Tasman, kiwi, looks like it is in a range between 55-cents and 60-cents… If the A$ does follow a rise in Gold, kiwi would grab the coattails of the A$…

It’s all tied to “Risk Aversion”… If Risk Aversion continues to hold a grip on the markets because of the Credit Crisis, then Commodities as a whole can’t take off on any extended rally, and that keeps the currencies in check too. I do see less Risk Aversion in the markets these days than I saw in October and November, but it remains there like the relative that comes to stay for Christmas and doesn’t leave!

The Gaza Strip fighting doesn’t do anything to eliminate the Risk Aversion trades, but does lend a hand to the rise in Swiss francs. The franc is still seen as a “safe haven” currency. We had a few people sell francs yesterday on some story they read about Switzerland’s economy mirroring Iceland’s… Yeah right! OK, I’m not in Switzerland, and don’t have the on the ground experience there, but that sound pretty strange doesn’t it?

Long time readers might recall when I used to give the weekly updates of the IMM futures positions in the currencies. This was one way of watching the demand for a currency, or the lack of demand in short positions in a currency. I stopped because at one point it was getting crazy each week. But, I never stopped watching them… And I noticed something last week… Dollar short positions, the previous week, stood at $238.3 million… But last week they jumped to $559 million, with positions in yen, euro, franc, loonies and A$’s all increasing… Hmmm…

A friend / colleague in Jacksonville sent me a story in the WSJ yesterday regarding this Russian dude that has predicted the fall of the U.S. He first predicted it in 1997, and said the U.S. would fall by 2010, with sections of the country going to different countries. This is all crazy stuff folks, but if you want to read it, put away the sharp objects, and click here.

Now… I’m not even buying one word of what this guy is saying, and liken him to Iben Browning, you know the guy that predicted the massive earthquake in the 80’s? But found it interesting that he wrote his first thoughts on this in 1997…

The Chinese renminbi is back to its old tricks of barely registering gains on the scale… But at least they are gains! The renminbi’s gains this year will come in around 7%… Hey! That’s better than losing 43% in the NASDAQ! The currency was on pace to gain more than 10% this year until the recent goings on… I suspect the Chinese currency officials will continue to allow the renminbi to gain, but not down a One-Way Street. So expect setbacks along the way…

Currencies today 12/30/08: A$ .6925, kiwi .5780, C$ .8135, euro 1.4180, sterling 1.4510, Swiss .9455, ISK 145.50, rand 9.4940, krone 6.9660, SEK 7.7250, forint 188, zloty 2.9325, koruna 18.75, yen 90.15, baht 34.75, sing 1.4410, HKD 7.75, INR 48.48, China 6.8309, pesos 13.70, BRL 2.3540, dollar index 80.55, Oil $39.15, Silver $10.81, and Gold… $871.75.

Source: Risk Aversion Remains but is Waning

“The key to approaching 2009,” writes Dan Amoss today, kicking off our week of New Year forecasts, “is to view everything form the perspective of the Treasury and the Fed, as distasteful as that may be. Everyone knows that the real economy stinks and we have too much debt. I doubt everyone realizes just how extreme Treasury/Fed will be in using the deficit and the paper money system to stop the Great Depression 2 scenario.

“I expect the inflationary bailout initiatives to start attacking deflationary forces from the ‘flank,’ to use a military term. The banking system destabilized because its collateral — houses and mortgage backed securities — collapsed in 2008. While the authorities may not be able to reinflate old bubbles, I’m betting they can employ cheap Treasury financing to cushion the decline. This involves refinancing homeowners out of toxic mortgages into conventional mortgages. They’ll also find some way to deal with the problem of negative home equity, even if it involves highly inflationary tactics like Treasury assuming losses from principal reductions via Fannie and Freddie, and if foreigners balk at absorbing new Treasuries, the Fed will monetize them. If so, we could see a fast track to the gold and oil bubbles that I predicted last year.

“In markets, it’s far too easy and popular to be bearish on everything but Treasury bonds, so odds favor a sharp rally in early 2009 — a rally in the S&P 500, led by stocks with the most sustainable fundamentals, including energy, commodities and infrastructure. Stocks with weak fundamentals may participate, but quickly roll over as economic reality sets in. Many will go to $0 in bankruptcy.”

The Fed’s latest bailout target? GMAC, the financial arm of GM. Bernanke and company granted GMAC the mythical status of “bank holding company” late last week. Like Goldman Sachs and American Express, GMAC is set to join the group of about-to-fail financials given last minute access to the Fed’s discount window, and potentially TARP funding.

That’s great news if you’re in GM’s corner. GMAC handled roughly 35% of GM’s retail loans in 2007. Thus, a GMAC failure would be, umm, less than ideal for the doomed automaker. Shares of GM popped 13% Friday on the news.

But GMAC isn’t an official bank holding company yet. Part of the Fed’s deal stipulated that GMAC successfully conduct a complicated debt-for-equity exchange by midnight Friday. Long story short, that deadline came and went, and GMAC spokespeople won’t say if they pulled it off.

Twenty-five banks went under in 2008. We’re surprised to report the FDIC had a quiet Christmas weekend, without a single last-minute financial failure. And given their propensity for weekend takeovers, we’ll guess that there will be no more bank closures in 2008.

Granted, 25 is the most since the S&L crisis that plagued the ’80s. We set some records in 2008 too, like Washington Mutual, the biggest bank failure ever. But still, just 25 banks… doesn’t that feel a little too easy?

The FDIC thinks so — 171 institutions remain on their “problem list.” They’ve already doubled the budget for 2009, to $2.2 billion. According to American Banker, most of that money is headed to the FDIC’s “resolution and receiverships” division, which plans on hiring another 800 bean counters to help deal with rising bank failures.

We expect a healthy share of retail failures in 2009 too. The latest shred of evidence: From Dec. 1 to Christmas Eve, total retail sales (excluding autos) fell 8% year over year. That’s even worse than November’s 5.5% plunge.

We admit, these MasterCard stats are skewed. If you factor out gasoline, retail sales are down “just” 2.5% in November and 4% in all but the last week of December. But even without gasoline sales… once the final tallies come in, we suspect this Xmas retail activity will be declared the worst on record.

And if you thought wealthy shoppers and high-end retailers were immune to this holiday funk, you were wrong. Check out this interesting breakdown from today’s WSJ:

No surprise, the National Retail Federation is the latest group to beg for a government bailout. The country’s largest retail trade organization petitioned Barack Obama last week to add a series of tax-exempt shopping days to his “New New Deal” stimulus package. The NRF wants three 10-day periods of tax-free shopping in 2009, which the group estimates would save consumers up to $20 billion.

As evidenced by our coverage above, consumers failed to open their wallets when retailers offered huge, desperate holiday discounts… why would they rush into stores for a 6% tax break?

So who will thrive in this retail apocalypse? If you insist on consumer names, the people at breakingviews.com might be on the right track. Behold its “Poor Getting Poorer Index.” As the site describes it, “a basket of 22 equal-weighted stocks that includes the retailers, white-label manufacturers, repossession agencies, dollar stores, pawnshops and other public companies poised to capitalize on rising poverty.”

Over the last 12 months, this motley crew index is up 9%. Considering the S&P 500’s 40% fall over the same period… not too shabby.

Stocks muddled through last week, ending down just a bit. Low volume and more weak economic news pushed the Dow down 0.7% for the week. The S&P 500 fared worse, down 1.7%, and the tech-heavy Nasdaq kept with its volatile ways, falling 2.1%.

This morning, it’s looking about the same. Stocks are slowly drifting down, led mostly by this bit of news:

The government of Kuwait backed out of a $17 billion deal with Dow Chemical today. The Kuwaiti Cabinet said they feared the worldwide slowdown could bring “unpredictable consequences to any global firm” and that the deal was just too risky. Now that oil’s under $40 a barrel, we suspect they’ll be spending petrodollars a bit more thoughtfully.

The two groups were planning to establish the world’s largest maker of polyurethane.

The price of oil soared 8% this morning after Israel’s somewhat-surprise attack in Gaza over the weekend. While Israel and Hamas renew their battle over the holy land, oil traders are a bit worried about Middle Eastern supply chains. Oil was due for a day up anyway… this morning’s rally snapped a nine-session losing streak.

Thus, light sweet crude popped to just over $40 a barrel.

Gas prices, on the other hand, have found a new credit crisis low. The national average fell for its 10th consecutive day this morning, to $1.61. You’d have to travel back to February 2004 to find gas that cheap… amazing. Prices are down over 60% from July’s record high of $4.11.

“The U.S. Energy Dept. statistics state,” writes Byron King, “that the nation burns about 9.4 million barrels of gasoline per day. That’s about 395 million gallons (at 42 gallons in a barrel). Let’s say a gallon of gasoline is $2.75 cheaper than it was back in July, when I was paying $4.40 per gallon. Take 395 million gallons per day times $2.75 savings per gallon. That’s almost $1.1 billion PER DAY that U.S. consumers are saving at the gasoline pumps. That’s over $32 billion per month of savings, or about $200 billion over six months. “$200 billion? As the saying goes, ‘Show me the money.’ In a sense, the world oil industry has given the American people a huge tax cut. Or call it a ‘bailout bill’ for consumers, except that Congress did not borrow the money to fund it. And that $200 billion is not just money coming out of the hides of Big Oil and those betes noires like Exxon Mobil or Chevron. No, this is a $200 billion cheap-oil tax cut paid for by the sheiks of Araby, Mr. Putin of Russia, Generalissimo Chavez of Venezuela and Mr. I’m-a-Dinner-Jacket of Iran. Could not happen to a nicer bunch, eh?

“So American consumers are receiving a benefit that could be worth, say, $200 billion over six months. But there’s no addition to the national debt, and it’s being paid for by people we don’t like very much. Win-win, right? That’s the best kind of tax cut.”

Of course, cheap oil and gas have downsides too. For Byron’s full account, read your latest Outstanding Investments alert.

The violence in Gaza gave traders another reason to sell the dollar today. As we write, the dollar index is down a full point, barely clinging on to 80.

The Russian ruble remains the currency headline of late. Last month, the Russian government snipped the trading band between the ruble and a basket of other currencies… considering the crashed prices of oil and gas, the ruble deserves to be taken down a few notches.

The Russian currency has since plummeted to a four-year low versus the dollar and an all-time low compared to the euro. This morning, it’s down another 1.5%

The sum of today’s entire issue equals a nice day for gold. For all that we’ve mentioned above, the spot price is up $30 from Friday’s close, to $880 an ounce.

“I think 2009 will be a wall-to-wall year of pain and languor,” writes a reader offering his New Year forecast. “But I can’t imagine how the bottomless bailouts and desperate war against deflation don’t undo the dollar to even greater levels. Gold will come back more than it has by the fall, if not a little earlier, when the Obama “honeymoon of hope” starts to wane.

“It will take longer for oil to rebound, because that needs the economy to look like it’s warming up again. But the Peak il problem is still out there unresolved. And even though this would be the right time to invest in a disciplined way in energy alternatives (when there’s some breathing room in the energy prices), we will face that issue again, and even more bluntly than before. Buy oil now while it’s cheap.

“Likewise, I can’t help but think that as much as the “E” in P/E is going to suffer over 2009, those companies that have the cash and business advantages will rise once again. Buying now might be buying before a further drop. But prices on a lot of stocks are already good. Catching a lot of future upside would be worth, probably, even a little more of the more immediate downside. If you’re buying with your eyes open.”

The 5: Sounds about right.

If you would like to share your 2009 outlook, send it on over, here: 5minforecast@agorafinancial.com

“So your parent company’s home office,” writes our last reader, referring to last Tuesday’s issue , “is two blocks out from the red-light district… Am I the only one saying, ‘Now that explains a lot’?”

The 5: Heh. Well, it was our first headquarters here in “Charm City.” We’ve since moved to a slightly more comfortable locale. And that same red-light district is about one block from the mayor’s office, most of the city government and courts and police HQ. That should “explain a lot” about Baltimore too.

Source: 2009 Forecast, More Banks to Fail, Retail Disappoints, Recession Stock Picks, Huge Tax Cut and More!

Wall Street stumbled on Monday after a joint venture between Kuwait and Dow Chemical fell through, threatening one of the larger merger deals of the year and adding to fears about a faltering global economy.

Dow shares tumbled to their lowest since 1991 after Kuwait decided to end a $17.4 billion petrochemical joint venture amid slumping petrochemical sales and the global financial crisis.

The news ignited worries that the largest U.S. chemical company would not be able to buy rival Rohm & Haas , which Dow agreed to acquire for about $15.3 billion in July. Rohm & Haas (ROH) shares fell as much as 25 percent.

These declines were also exacerbated by light volume, analysts said. Trading is expected to be light throughout the week, abbreviated by the New Year’s holiday on Thursday.

The increasingly anemic economic data and company news has prevented a hoped-for year-end rally.

What investors “are grappling with is how long and how deep of a recession this is going to be and when the sun is going to go up again,” said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland.

The Dow Jones industrial average was down 129.99 points, or 1.53 percent, at 8,385.56. The Standard & Poor’s 500 Index was down 14.10 points, or 1.62 percent, at 858.70. The Nasdaq Composite Index was down 34.94 points, or 2.28 percent, at 1,495.30.

The Nasdaq outpaced the other major indexes, dragged by large-cap tech companies including Research In Motion , which fell 4.7 percent to $38.94 and Microsoft Corp , which shed 1.8 percent to $18.79.

Dow Chemicals and Rohm & Haas were among the biggest losers by percent on the New York Stock Exchange. Dow was down nearly 20 percent to $15.18, while Rohm & Haas was off about 15 percent to $54.03.

The collapsed joint venture added to concerns about the chemicals industry, which has been struggling because of recessions in most developed countries and a sharp slowdown in emerging economies.

Economic worries overshadowed gains in the energy sector as oil climbed on concerns that crude supplies could be threatened by tensions between Israel and the Hamas-ruled Gaza Strip.

Oil prices rose to more than $38 a barrel as Israeli warplanes hit the Gaza Strip for a third day and Israel prepared to launch a possible invasion. The offensive has killed more than 300 Palestinians in the deadliest violence in the territory in decades.

Chevron and Exxon Mobil topped the Dow, while the S&P 500 index of energy stocks rose more than 1 percent. Chevron rose 1.3 percent to $71.28 and Exxon Mobil edged up 0.5 percent to $77.62.

Analysts noted the rise in energy prices did not bode well for cash-strapped consumers.

As 2008 winds to a close, investors are looking to the incoming White House administration to offer another stimulus package and help usher the country out of a year-long recession. The broad S&P 500 is down about 40 percent for the year, putting it behind 1931’s 47.1 percent record drop.

President-elect Barack Obama has said signing a major economic stimulus package will be his priority when he takes over the presidency on Jan. 20.

Over the weekend, one of Obama’s top economic advisors said financial policy should address both immediate job creation and longer-term investment needs.

Lawrence Summers, Obama’s pick to head the White House National Economic Council, said spending government money solely to stimulate consumer spending would be a short-sighted mistake.

Deepa Seetharaman  NEW YORK, Dec 29 (Reuters)