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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Square_Dealings who wrote (17373)	12/2/2004 11:13:25 AM
From: mishedlo	Respond to of 116555

Grain report CORN Hi, this is Tim Hannagan its Wednesday Dec. 1 and the markets are closed. The trade remains heavily short corn with large speculators adding 13 thousand new short positions to their book last week while small speculators took 6 thousand shorts off. Funds were sellers last Friday and light sellers Monday. The trade jus6t seems to wasn’t to continue to be short while farmers sell portion soft their record crop to pay near term bills and hold beans for higher prices into spring. Hold 2.00 Jan. puts at 2 cents or $100 cost. Longs in the market should get out on a close under 2.00 as 1.90 is next support. Its tuff times for news as winter sets in. Demand us good but not great and with a record crop on our back we need great demand. Unless some new news enters we cant expect a short covering rally until month end comes. WHEAT Same old same old. No demand. We came down to our 2.98 support on Tuesday that I projected on last Fridays report. We bounced back to 3.036 basis March futures but sellers re entered testing support again at midsession today. Long term demanded will return as our two biggest export competitors Canada and Australia have suffered short falls in production with Australia crop off 10% or better and Canada with less than 30% of their crop high enough in quality to meet export demands. For the immediate near term Australia continues to meet customers needs, wanting to keep regular customers business and that keeps the U.S. as a third port to turn to for world needs. With our winter crop in great shape at 76% good to excellent condition versus 50% a year ago and going dormant in most areas until early March demand remains our primary pricing force. Keep puts on until demand turns. I have over the past several weeks recommended the Jan. 3.10 then 3.05 and 3.00 puts. They expire in several weeks. Consider buying a Feb. 2.90 put at 10 cents $500 and selling a 3.25 call for 6 cents and receive $300 credit your now in for 4 cents or $200. Funds are short over 20 thousand contracts so months end will bring at least a small short covering rally. A close on march under 2.98 sets us up to test 2.90 then 2.75 worst case scenario we need a close over 3.10 to turn bullish. BEANS Last week we hit a monthly high of 5.65 after posting a short covering rally form our Nov.8 low of 5.08 basis March futures but funds came in Friday as sellers giving us a 5 cent lower close after a 4 cent higher open. I viewed this as near term negative and suggested risk was down to 5.36 now. Well fund selling Monday and Tuesday gave us a 5.334 low Tuesday and a 5.36 close. Just as the cart pattern suggested. Now what. We have a nice balance of negative to bearish news and friendly to9 bullish news. The bearish is obvious. We have a record crop on our back and sharply higher ending stocks to chew thru. The bullish is great demand out of Asia especially China and talk that two more southern delta states have been found have the Asian rust disease bringing the total to eight states. The southern delta produces about 10% of our coarse grain. It’s the mid west that counts. Its clear this yield destroying disease that hurt Brazil last year will spread into the midwest this spring with the trade thinking growers will plant less beans and more corn but this will be a longer term, issue to price in. Seasonally were in our demand driven market as harvest is complete. From Nov. to March we see prices gradually move higher as a harvest lows posted in late Oct. and early Nov. with demand controlling the direction until south American crop come in late March thru April when they take over demand. The last there years have seen this seasonal demand periods hold true. So far we have posted a harvest low Nov. 8 of 5.08 were 23 cents over that price. Long term charts suggest were on target for another 120 day seasonal trend. Caution seasonal have mountains and valleys. Regardless of historical patterns money controls near term direction. Commercial exporting firms have been light buyers at best. Large trading funds since Friday have been sellers. They are the bullies on the market. They always push it higher than it should go and lower as they defend their position. The finds appear to wasn’t to push prices lower near term with sales of 6 thousand contracts Friday and 3 thousand Monday. Floor reports suggest they hold about 30 thousand short futures and options combined. This sets us up for a nice month end short covering rally but near term suggests lower prices are ahead. On Mondays report I gave 5.36 as our support and private point/ A close for the week over 5.36 would suggest a chart move to 5.80. A daily close under 5.36 to 5.80. A daily close under 5.36 would lead to a test of 5.20 and maybe contract lowest of 5.08. Funds are in control. Today’s close under 5.36 suggests funds will continue to sell. Thursdays weekly export sales report should come in lower than last week do to one less marketing day due to the holiday but it should be a decent number for a four day week lending to a higher open which you should sell short.

To: Square_Dealings who wrote (17373)	12/2/2004 11:14:07 AM
From: mishedlo	Respond to of 116555

ROUNDUP Brown defiantly stands by growth forecasts, raises borrowing estimates Thursday, December 2, 2004 2:08:22 PM afxpress.com LONDON (AFX) - Chancellor Gordon Brown defiantly stuck to his previous projections for growth in his pre budget speech today, much to the disappointment of market observers who believe the forecasts are overly optimistic. Brown maintained UK 2005 GDP forecast at 3.0-3.5 pct while for 2004, he said GDP growth will come in at 3.25 pct - the midway point of the projection he made in the budget earlier this year In contrast, consensus estimates of independent economists point to GDP growth of just 2.5 pct in 2005 - well under the range Brown provided. The report comes just over half-way through the 2004-05 fiscal year, ahead of the full budget due to be released next spring For its part, the UK Treasury said the measures outlined in the today's report are fiscally neutral. There was no surprise, however, that Brown insisted his self-imposed 'Golden rule' which allows borrowing only for investment purposes will be met at all times in the current economic cycle - which he previously confirmed runs until the 2005/6 fiscal year ends in April 2006 Brown said the government has a margin of 8 bln stg over the rest of this economic cycle to meet the golden rule. Meanwhile, the second rule, the sustainable investment rule, will also be met to the tune of 59 bln stg, he added. The assertions came despite upward adjustments to the government's borrowing requirements He projected that government net borrowing in 2004/5 will be at 34 bln stg from the previous estimate of 33 bln. In 2005/6 borrowing is expected to reach 33 bln stg compared with 31 bln stg previously. For the two years after that, borrowing is seen at 29 and 28 bln stg respectively from the 27 and 23 bln forecast previously Still, the new forecasts are consistent with Brown's previous promise that government spending will slow steadily over the coming years After the report, the Debt Management Office raised its gilt issuance plans for the coming fiscal year to 50.3 from the 47.1 estimated at the time of the budget in March Elsewhere, Brown said inflation will remain low, with the consumer price index rising by 1.25 pct this year, 1.75 pct in 2005 and 2.0 pct in 2006 The Bank of England is tasked with targeting a CPI rise of 2.0 pct. Brown announced no rises in tax hikes - again much as expected - given that the ruling Labour government faces general elections most probably in the first half of next year. Specific measures were few in the report but were decidedly family and election friendly. Brown said the government will extend free nursery care and extend maternity and paternity leave, in a drive to improve childcare provisions in the UK. He also said the ISA tax-free savings accounts will be extended for another five years, and chose once again to freeze fuel duties given the surge in crude oil prices And in a clear sign that the government is set to call a general election in May next year, Brown announced 1 bln stg extra help to local authorities to help alleviate the pressures on the local council tax. Council tax payers are expecting to get another increase in their tax bills in April next year In addition, Brown said the government will focus on climate change issues when it takes over the presidency of the G8 group of leading industrial nations Other measures included a further 105 mln stg for counter terrorism and security measures. Brown also announced there will be further deregulation in the financial services industry.

To: Square_Dealings who wrote (17373)	12/2/2004 11:22:29 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Trichet says euro rise unwelcome, intervention a ´weapon´ for central banks Thursday, December 2, 2004 2:27:18 PM afxpress.com Trichet says euro rise unwelcome, intervention a 'weapon' for central banks FRANKFURT (AFX) - European Central Bank president Jean-Claude Trichet repeated that the euro's rise against the dollar is unwelcome and said intervention in foreign exchange markets "is a weapon" that is available to central banks. But Trichet declined to be drawn further on the possibility of the ECB intervening in markets to halt the euro's rise "We consider the recent (euro) moves are unwelcome," he told a news conference after the ECB governing council elected to leave the bank's key interest rate unchanged at 2.0 pct, as expected. Trichet said intervention "is a weapon" that is available to central banks. But he said he never comments on intervention, and added: "verbal discipline is really of the essence" -- perhaps referring to recent comments on intervention by Japanese monetary officials Verbal dicipline - yeah right Mish

To: Square_Dealings who wrote (17373)	12/2/2004 11:27:48 AM
From: mishedlo	Respond to of 116555

Trichet says ECB did not discuss possibility of rate cut at today´s meeting Thursday, December 2, 2004 3:01:30 PM afxpress.com Trichet says ECB did not discuss possibility of rate cut at today's meeting FRANKFURT (AFX) - European Central Bank president Jean-Claude Trichet said an interest rate cut was not among the options considered by the ECB governing council at its meeting today. He said the council considered the two other options -- to hike rates or leave them unchanged -- and reached a conclusion that the present level of rates is "correct". The ECB earlier announced it has decided to leave its main refinancing rate at 2.00 pct, the same level since June 2003. Trichet said there was a large consensus on the council that rates are at the right level for the moment, but that continued vigilance is needed. "Interest rates are correct and vigilance is of the essence," he said. He said council members weighed all the pros and cons of the interest rate options under consideration before reaching its conclusion, but he declined to comment on the proportion of council members backing each option. He said all members took the various arguments into account before the consensus to leave rates unchanged was reached. =============================================================== If they want to hike and send the Euro to 1.50 more power to em. I sold the last few of my unhedged Dec 05 Euribor calls two days ago. Mish

To: Square_Dealings who wrote (17373)	12/2/2004 11:39:11 AM
From: mishedlo	Respond to of 116555

UK BCC worried by Brown´s borrowing plan; says 2005 growth target ´ambitious´ Thursday, December 2, 2004 3:17:14 PM afxpress.com UK BCC worried by Brown's borrowing plan; says 2005 growth target 'ambitious' LONDON (AFX) - The British Chambers of Commerce has expressed concerns over the government's borrowing plan contained in Chancellor Gordon Brown's latest pre-budget report BCC president Bill Midgley said the report failed to address the serious concerns that public borrowing remains "too high." "In the immediate future, excessive borrowing will complicate the job of the Bank of England, making it more difficult for the monetary policy committee to cut interest rates and may even force a rise," he said He also found the 3.0-3.5 pct GDP growth forecast for 2005 to be too optimistic, saying that growth could likely be "nearer" 2.5 pct. "The sharp slowdown in growth in Q3 2004, and the disappointing messages conveyed by the BCC's recent Quarterly Economic Survey, cannot be lightly shrugged off. Even after allowing for a rebound in growth in Q4, the official forecast of 3.0-3.5 per cent growth in 2005 appears ambitious," he said