Against the Grain

What goes down on fear bounces on relief and the equities showed that with another round of stunning moves as the US revealed plans to divert some of the US$ 700 billion TARP funds towards direct investment in the nine major US banks (the DJI leapt 936 points or 11%, NASDAQ 11.8%, FTSE 8%, Nikkei closed y/day rose 1154 points or 14%, Hang Sang 4.4% and ASX 3.7% on top of y/days gains). The rally faltered in US trading.

The present momentous events makes fundamental news in the metals and past economic data almost meaningless, however the recovery in equities has boosted commodities with cu leading the base metals. The Chinese General Administration of Customs reported preliminary Spt cu imports rose 14.9% to 213,782 tonnes of cathode, alloy and semi finished products. Total imports in the January-September period fell 10.6% on year to 1.9 million tonnes. The Spt Japanese consumer sentiment index was 31.4 (Aug 30.1). In Europe the Spt German ZEW investor confidence index declined to -51.1 (Aug -41.1), the institute’s Oct indicator of economic sentiment saw current conditions at -35.9 well below expectations(Spt -1) and economic expectations -63.1 disappointed (-41.1). The UK Spt CPI rose 0.5% (Aug +0.6%) yoy +5.1% (4.7%) a 16 year high with the RPI up 0.6% (+0.3%) and +5% yoy (4.8%). Finally, Euroland Aug industrial output rose 1.1% as expected (Jul -0.2%) yoy -0.7% (-1.2%). The LME stocks saw cu and al rise which might slow any advance following equities but doubt it, cu into Rott 2550 and al Antwerp 3475 and Sing 2875. The CEO of Codelco expects the cu market to be in surplus in ’09. The Aug OECD  composite leading indicator fell 0.7 points and is 4.9 points lower yoy (US -0.5 / -5.3; Euroland -1.0 / -6.4; UK -1.1 / -6.1 and Japan -0.9 / -2.8). More interesting is their assessment of BRIC nations; China -0.7 / -3.1; Russia -2.3 / -0.4; Brazil +1.0 / +3.4 and India Jul -1.2 / -7.1.

The DJI jumped 300 points on the opening only to give it back over the session as worries about economic growth going forward gather traction.

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