Against the Grain

Looking at the Prudential bid for AIG Asia and trying to get our heads around a billion we came across the following quote, “The next time you hear a politician use the word “billion” in a casual manner, think about whether you want the “politicians” spending YOUR tax money. A billion is a difficult number to comprehend, but one advertising agency did a good job of putting that figure into some perspective in one of its releases. A billion seconds ago it was 1959. A billion minutes ago Jesus was alive. A billion hours ago our ancestors were living in the Stone Age. A billion days ago no-one walked on the earth on two feet. A billion pounds ago was only 13 hours and 12 minutes, at the rate our government is spending it.

Overnight cu was under pressure for two good reasons in Chile the cu industry has escaped the worst of the earthquake (both mine and infrastructure) and we heard y/day Chinese traders were good sellers into the panic rally - what does that tell you. From the structure of cu supply and demand, the speed and confidence with which Codelco came out with supply assurances bears testament to their production system and begs the question how much finished product are they holding in Chile in a global market estimated to be in surplus. The LME stock data did not shake the tree, cu cancelled warrants rose 3.6 kt in Rott & US with al cancelled warrants down 5.9 kt from Rott & US. Around 10:30 it became a currency play, a weaker US$ saw metals grind nervously higher. In the afternoon commodities gathered independent strength as gold, oil and base metals jumped higher on what seems to be a “better feel about things”.

The Australian central bank raised rates by 0.25% to 4% and their currency declined! Their Jan retail sales rose 1.2% (Dec -0.9%) as building approvals fell 7% (+5.2%). In Japan Jan unemployment was 4.9% (5.1%) and household spending yoy rose 1.7% (+2.1%). The Feb JP Morgan global composite manufacturing PMI was 55.2 (56.1), a slight slowdown in a strong sector. In the UK the Feb construction PMI was 48.5 (48.6). The Euroland Jan PPI rose 0.7% (+0.1%) yoy -1% (-2.9%).

The Bank of Canada left rates unchanged at 0.25%. There was no US data.