« Stelco shareholders are locked and loaded, Thurs., Nov. 24, 2005, 7:49 PM | Main | Stelco shareholder legal brief, Fri., Nov. 25, 2005, 8:36 AM »

November 25, 2005

Morning notes: Fri., Nov. 25, 2005, 7:40 AM

Gold spot is up +$3.00 this morning to $496.50. But note that spot is now higher than the near futures (see note from reader, below), so this market is not as strong as it had been.

Silver is up 4.5 cents to $8.20. Silver looks ready to break out to new high ground.

Copper is off about three-quarters of a penny. Platinum is up $6.00.

In Europe, mining stocks are stronger.

The USD is stronger against the Yen and weaker against the Euro.

Some futures markets are closed today so there will not be an oil market in the U.S. NY Crude oil has been strong. The NYSE will close at 1:00 pm I believe, and bond trading will also close early.

The bond market has been flying. The bull trap might have longer legs (and bigger jaws) than I earlier thought. If so, is that a question (as TH's say) that inflation is no longer a problem, or that the U.S. economy is in death throes, or that foreign investors have made so much money in trading this 2H05 that they want to park the proceeds in USD and gold?

U.S. Money Supply will be reported at 4:30 pm. This will be an important number in future.

Here is the Haver Economics discussion of monetary aggregates (M1, M2, and M3):

---

Money Supply
Definition
The monetary aggregates are alternative measures of the money supply by degree of liquidity. Changes in the monetary aggregates indicate the thrust of monetary policy as well as the outlook for economic activity and inflationary pressures.

Why Do Investors Care?
To be honest, the various money supply measures don't matter to most investors these days. The monetary aggregates (known individually as M1, M2, and M3) used to be all the rage a few years back because the data revealed the Fed's (tight or loose) hold on credit conditions in the economy. The Fed issues target ranges for money supply growth. In the past, if actual growth moved outside those ranges it often was a prelude to an interest rate move from the Fed. Today, monetary policy is understood more clearly by the level of the federal funds rate. Money supply fell out of vogue in the nineties, due to a variety of changes in the financial system and the way the Federal Reserve conducts monetary policy. The Fed is working on some new measures of money supply, and given the way economic indicators ebb and flow in popularity, don't be surprised if the monetary aggregates make a comeback in the future.

---

Bloomberg reported this morning that the housing bubble has apparently popped in Boston MA under stress from rising mortgage rates. The number of houses sold is down, and the median selling price is significantly lower.

Traders should be looking into this aspect of the market because the implications are broad.

Holiday shopping season starts today, and the TH/media spin will be incredible. They are trying to wring out that last USD from consumers. By telling you that spending is way up, you'll perhaps want to buy the retailers, and maybe even spend a few extra USD, which of course would give a boost to the economy (for now).

To this point, I have seen spending estimates ranging from a low of +2 pct (bad) to over +10 pct (outstanding). Traders be wary.

Finally, I see that Conrad Black, Lord of Hollinger or something wants to return to Canadian citizenship. Apparently, if as and when the U.S. Attorney manages to convict him for corporate fraud, he'd rather spend his time in a Canadian jail. There is a U.S.-Canadian law that would facilitate that transfer.

For sure Lord Black doesn't want to spend his remaining years in Leavenworth Prison, because his demise there would likely be close by at somebody's hand. In Canada, I'm guessing that he's dreaming of a padded prison cell complete with working office and home" entertainment centre.

In any event, I don't think he'll be put under house arrest in his West Palm Beach pad.

I have written a lot lately about organized groups". I believe that by following along with this Hollinger/Black et al case, you will learn a lot about one of them. Canada has a few of them you know. Meanwhile, the Canadian securities authorities seem to prefer going after the Little People.

I'm looking forward to the Enron case in the U.S., which comes up soon.

Today, I have arranged meetings downtown in the afternoon, so I'll be leaving just before lunch, returning Saturday with the Week in Review.

---

"Bill, re your morning notes today: "spot is now higher than the near futures":
Comex Gold Futures are closed until Monday. But to get an indication you may have a look at Tokio Gold Futures, which set a new high overnight.
regards,
Markus"

Posted by Posted by Bill Cara on November 25, 2005 07:40:51 AM | Category: Cara Today in the Market

Discourse