Against the Grain

It was the tale of two stimulus packages overnight in the US the two houses of Congress have reach agreement on the final bill worth US$ 789 billion and should vote on it this week then signed into law with full razzmatazz early next week. In the meantime the Australian Senate rejected their US$ 28 billion package by one vote as an Independent senator demanded more help for his State. The bill is very likely to be represented as early as Fri.

The trading in Asian time was more subdued than of late, in South Korea the central bank cut official rates 0.5% to a record low of 2.0%. A report today pointed out that that Chinese Jan new bank loans grew at 100% of the Jan ’08 rate (when GDP was over 12%) at 1.62 trillion yuan. If this cannot lift the country’s internal growth then that economy is in trouble. The Dec Indian industrial output fell 2% yoy (Nov +1.7%) with manufacturing output declining 2.1% (+1.7%), the weekly inflation rate slowed to 4.39%. The LME stock movements were insignificant compared to late with a pick up in cu and zn withdrawals. The Dec Euroland industrial output fell 2.6% (Nov -2.2%) yoy the decline was 12.0% (-8.4%). In the morning session metals were stuck in an even tighter range than y/day with volumes significantly lower. The markets have plenty to absorb to name a few, the upcoming US fiscal package, UK PM before a Parliamentary committee, the Chinalco bailout of Rio Tinto, the weekend G7 finance ministers meeting in Rome and the general economic uncertainty.

The US weekly jobless claims fell 8 k to 623 k and a glimmer of hope, Jan retail sales rose 1% overturning an expected fall (Dec -3% revised from -2.7%) with ex auto sales up 0.9% (-3.2%). This seemed to give metals a small lift before pressure came back in gold is again the most volatile between 14:00 / 14:30 it traded from 940 to 938 and up to 946! The Dec business inventories declined 1.3% more than expected (Nov -1.1%) this adjustment is accounting for declining demand.  Late in the session shorts looked to take profits as the DJI recovered and soon pushed prices back towards their mid points.