Хронология из DJN Market Talk

By Nicholas Larkin

 

Jan. 15 (Bloomberg) -- Gold may climb to a record in the first half as investors seek protection from declines by the dollar and possible inflation, according to researcher GFMS Ltd.

Governments are selling more debt to fund bank bailouts and revive growth from the worst slump since the Great Depression, while U.S. President-elect Barack Obama aims to pass a stimulus plan of about $775 billion to help the world’s largest economy. Gold, sometimes bought as an alternative investment to a weaker dollar, reached a record $1,032.70 an ounce in March.

 

“The scale of the proposed stimuli raises a clear threat of significant inflation and, with its U.S. focus, the likelihood of dollar weakness,” London-based GFMS said today in a report. A new all-time peak “is quite feasible during the first half.”

GFMS forecast in September that gold would rally to $950 an ounce at the end of 2008, about $70 above actual year-end prices. The bull market may now be extended, with a peak higher than previously expected sometime in the first half, it said.

 

 

Consumer Prices

Still, Europe’s inflation rate dropped to the lowest in more than two years in December as energy prices fell and consumers cut spending, the European Union statistics office said today. U.S. consumer prices will fall 0.3 percent in the first quarter, compared with an inflation rate of 1.3 percent in the preceding three months, according to a Bloomberg survey of economists. Inflation will again resume in the fourth quarter.

Gold for immediate delivery fell $2.90, or 0.4 percent, to $810.49 an ounce at 3 p.m. in London. The commodity, down 7.4 percent in 2009, has gained for eight straight years.

“The rally is unlikely to be derailed by supply due to relatively flat mine output, subdued central bank sales and, unless prices go to $950, little change for scrap supply,” GFMS said.

While GFMS expects mine production to remain stable at 1,170 tons in the first half, it predicts a 23 percent drop in central bank sales to 127 metric tons. Investment demand for bars may climb 49 percent to 201 tons in the period, while consumption from jewelers and other fabricators probably will decline 4 percent to 1,254 tons, its forecasts show.

Investment Demand

Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, expanded by 0.4 percent to a record 790.66 tons, the company’s Web site shows. The fund has overtaken Japan as the world’s seventh-largest gold holding. Investment in Zuercher Kantonalbank’s gold ETF rose to a record 3.217 million ounces (100 tons) last week.

Jewelry consumption may drop 11 percent in the first half as the economic slump hurts demand and affects other fabrication areas, particularly electronics, the researcher said. Tiffany & Co., the world’s second-largest luxury-jewelry retailer, said yesterday holiday sales fell 21 percent as the slowdown spurred wealthy consumers to spend less.

De-hedging as a source of demand will slide 82 percent to 45 tons, GFMS said.

Forward gold sales usually enable miners to sell the metal for an agreed amount at a future date in a bet that prices will fall below the locked-in level. Hedges have been a “bad bet” since 2002, researcher VM Group said in August.

Bullion will average $910 an ounce in 2009, 4.3 percent more than last year, according to the median forecast of 20 analysts, traders and investors surveyed by Bloomberg in December. Prices will average $881 an ounce this year, the London Bullion Market Association said last week, citing a survey of 24 traders and analysts.

 

To contact the reporter on this story:

Nicholas Larkin in London at nlarkin1@bloomberg.net

 

 

 

 

 

 

By Wes Goodman

 

Jan. 16 (Bloomberg) -- Treasury notes declined for the first time in seven days as gains in Asian stocks lured investors away from government debt.

The 10-year yield rose two basis points to 2.22 percent as of 9:35 a.m. in Tokyo, according to BGCantor Market Data. The price of the 3.75 percent security maturing in November 2018 fell 5/32, or $1.56 per $1,000 face amount, to 113 15/32. A basis point is 0.01 percentage point.

 

To contact the reporter on this story:

Wes Goodman in Singapore at wgoodman@bloomberg.net.

 

 

By Mark Shenk and Samantha Zee

 

Jan. 16 (Bloomberg) -- Crude oil traded little changed, set for a two-week decline of more than 20 percent, after OPEC said demand will drop this year.

Consumption of OPEC crude will shrink 4.2 percent to 29.5 million barrels a day, according to the group’s monthly report released yesterday. The discount of oil in New York to the Brent grade in London widened to as much as $10.79 a barrel yesterday, a record, because of rising supplies at Cushing, Oklahoma, the delivery point for barrels traded on the U.S. exchange.

“The overriding factor impacting the market is the fact that we are in the midst of a global recession, which is buffeting the U.S., even China,” said Rachel Ziemba, an analyst at RGE Monitor, an economic research company in New York. “That’s going to be a negative for oil demand.”

Crude oil for February delivery was at $35.59 a barrel, up 19 cents, on the New York Mercantile Exchange at 9:16 a.m. Singapore time after falling as much as 27 cents, or 0.8 percent, to $35.13. Yesterday, futures dropped $1.88, or 5 percent, to $35.40 a barrel, the lowest settlement since Dec. 24. Prices are down 62 percent from a year ago.

Brent crude oil for February settlement declined 39 cents, or 0.9 percent, to settle at $44.69 a barrel on London’s ICE Futures Europe exchange yesterday. The more-active March Brent contract rose 6 cents to $47.68 a barrel.

Crude-oil inventories at Cushing, Oklahoma, where West Texas Intermediate traded on the Nymex is stored, climbed 2.5 percent to 33 million barrels last week, the Energy Department said earlier this week. It was the highest since at least April 2004, when the department began keeping records for the location.

$50 WTI

“On average, we expect prices to be around $50 for WTI and Brent” this year, Francisco Blanch, head of commodities research at Merrill Lynch & Co. in London, said on Bloomberg television. “We’ve made no distinction even though the WTI market does seem oversupplied due to a number of issues around the Cushing area.”

The price of oil for delivery next December is 65 percent higher than for the front-month contract, allowing traders to profit if they can store crude. February 2009 crude ended the day at a $8.14 discount to March, from $3.88 on Jan. 5. This structure, in which the subsequent month’s price is higher than the one before it, is known as contango.

“The front end of the Nymex is weighed down by all of the oil at Cushing,” said Tom Bentz, senior energy analyst at BNP Paribas in New York. “WTI is the weakest crude grade out there right now.”

Reduced Demand

The Organization of Petroleum Exporting Countries shaved its global demand estimate for 2009 by 20,000 barrels to 85.66 million barrels a day. That brings this year’s reduction to 180,000 barrels a day, or 0.2 percent.

“Consumption could start to stabilize and potentially start to recover a little bit toward the end of this year, maybe early into next year,” Blanch said. “Of course, this is very dependent on fiscal and monetary policies starting to yield the expected result, which is some stimulus to economic activity.”

There will be a “major contraction” in demand among members of the Organization for Economic Cooperation and Development, with the United States being the “main contributor,” to this reduction, OPEC said.

U.S. fuel demand fell 6 percent last year, the biggest drop since 1980, as prices touched records and the economy contracted, the industry-funded American Petroleum Institute said yesterday.

U.S. crude stockpiles increased 1.14 million barrels to 326.6 million barrels last week, the highest since Aug. 31, 2007, the Energy Department said Jan. 14. Gasoline and distillate fuel supplies also rose.

Morgan Stanley is seeking a supertanker to store crude oil, joining Citigroup Inc. and Royal Dutch Shell Plc in trying to profit from higher prices later in the year, four shipbrokers said. Frontline Ltd., the world’s biggest owner of supertankers, said Jan. 14 about 80 million barrels of crude oil is being stored in tankers, the most in 20 years.

 

To contact the reporters on this story:

Mark Shenk in New York at mshenk1@bloomberg.net;

Samantha Zee in Los Angeles at szee@bloomberg.net.

 

 

 

 

 

 

РБК, 15 янв -- Цены мирового рынка на нефть по итогам торгов 15 января 2009г. на ведущих нефтяных биржах понизились. Официальные цены нефтяных фьючерсов ближайшего месяца поставки составили:

в Лондоне на InterContinental Exchange Futures - IPE Brent Crude - 44, 69 (-0,39) долл./барр.; в Нью-Йорке на New York Mercantile Exchange - Light, Sweet Crude Oil - 35,40 (-1,88) долл./барр.

Сохранение котировок Light Sweet ниже 40 долл./барр. свидетельствует о том, что рынок по-прежнему остается под давлением информации о пониженном спросе на энергоносители в США и растущих запасах сырой нефти и нефтепродуктов в стране.

По официальной информации Министерства энергетики США, за минувшую неделю запасы сырой нефти в стране увеличились на 1,2 млн барр., запасы бензинов - на 2,1 млн барр., а запасы тяжелых дистиллятов - на 6,4 млн барр. Тем временем потребление нефтепродуктов в США сократилось по сравнению с предыдущим годом на 4% - до 19,720 млн барр./день.

Особые опасения, в первую очередь у американских участников рынка, вызывают растущие запасы сырой нефти на терминале Cushing в Оклахоме, предназначенные для обеспечения физических поставок нефти по контрактам, заключенным на NYMEX. По состоянию на 9 января запасы нефти на терминале достигли нового рекордного уровня 33 млн барр., что свидетельствует о резком снижении интереса к покупкам.

 

 

By Liz Capo McCormick

 

Jan. 16 (Bloomberg) -- New Zealand dollar volatility touched the highest level in almost two months amid concern a weakening global economy will damp investor demand for the country’s exports.

The kiwi, as New Zealand’s currency is dubbed, has declined more than 9 percent versus the U.S. currency this week. Standard & Poor’s lowered the outlook on Zealand’s AA+ credit rating to negative from stable on Jan. 13, citing the risk that the nation’s current account deficit and overseas debt may curb growth and investment. Falling global economic growth means less demand and lower prices for the country’s exports, which include meat and hides, aluminum and dairy products.

“Volatility is reacting to expectations on the economic side and realized risks are starting to rise,” said Sebastien Galy, a currency strategist at BNP Paribas Securities SA in New York. “There is clearly more downward potential for commodity currencies, like the New Zealand dollar, that are much more exposed to the weakening of global demand for its exports.”

The implied volatility on one-month options for the New Zealand-U.S. dollar exchange rate reached 30.8 percent yesterday, the highest since Nov. 24. The rate, which is a measure of expected price swings and which traders quote as part of setting currency option prices, is up about 9 percentage points from a recent three-month low of 21.08 on Dec. 16. Volatility remains below a record high of 42.97 percent set on Oct. 24, the highest since at least August 1997, or a far back as Bloomberg compiles data.

Further Declines Predicted

The kiwi dropped 0.6 percent to 53.91 U.S. cents in late New York trading yesterday, near a one-month low. The currency will weaken approximately 13 percent to 46 U.S. cents by the end of the second quarter, according to BNP.

Falling global growth weighs on domestic output as it reduces demand for commodities, which make up about 70 percent of New Zealand’s exports. New Zealand’s prime minister, John Key, said yesterday the economy may not grow this year and the jobless rate may reach 7 percent, up from the latest reported figure of 4.2 percent.

Options are contracts granting the right, but not the obligation, to buy or sell a specific amount of a security at a pre-set price and within a set time period.

Volatility in New Zealand dollar options is rising faster on puts, which grant the right to sell it versus the U.S. dollar, than on calls, which allow purchases.

Put-Options Premium

The one-month so-called risk-reversal rate on Kiwi-U.S. dollar options reached minus 4.2 percent, its greatest put premium since Dec. 17. The rate reached minus 7.85 percent on Oct. 27, its greatest premium since at least October 2003, or as far back as Bloomberg compiles data. Negative values show greater demand for Kiwi puts versus calls.

“If you owe the rest of the world a lot of money, then there is more risk potential when the economy degrades very fast,” Galy said. “Realized risks increase, the bigger the imbalances are.”

New Zealand’s current account deficit, the broadest measure of trade, is 8.6 percent of gross domestic product. The U.S. current account deficit was 4.8 percent of GDP, and the Euro zone countries’ was 0.5 percent, as of September.

 

To contact the reporters on this story:

Liz Capo McCormick in New York at emccormick7@bloomberg.net

 

 

By Nicholas Johnston and Laura Litvan

 

Jan. 15 (Bloomberg) -- The U.S. Senate voted to allow the release of $350 billion in financial-rescue funds sought by President-elect Barack Obama.

Senators defeated, 52-42, a resolution that would have prevented the release of the second half of the $700 billion in the Troubled Asset Relief Program, enacted last year to boost the sagging U.S. economy.

“It’s money that can be spent, may be spent, by the new president, Barack Obama,” Illinois Democrat Richard Durbin said before the vote. “I want to give President Obama the tools he needs to breathe life back into this economy.”

The vote was the first legislative test for Obama, who faced some Democratic dissent this month over tax cuts he’s seeking to boost the economy and his nomination of Leon Panetta as his intelligence chief. Obama visited the Capitol and met with Senate Democrats behind closed doors this week to push for release of the additional rescue funds.

“I know this wasn’t an easy vote because of the frustration so many of us share about how the first half of this plan was implemented,” Obama said in a statement. He promised to set strict pay limits on executives at companies receiving funds, provide more loans to small businesses and ensure “taxpayers can see where their money is spent.”

Eight Democrats and one independent joined most Republicans in voting to block the funds, while six Republicans joined Democrats in voting to allow the money to be released. Arizona Republican John McCain, who as a presidential candidate backed creation of the TARP program, voted against releasing the money.

Letter from Summers

The vote came after Obama’s economic adviser, Lawrence Summers, told Congress that up to $100 billion of the funds will be used to ease the housing crisis. Lawmakers in both parties have said they want more of the money to be used to help homeowners at risk of defaulting on their mortgages.

“This program must promote the stability of the financial system and increase lending, preserve home ownership, promote jobs and economic recovery” and be used in a manner accountable to the public, Summers wrote in a letter to Senate Majority Leader Harry Reid.

Lawmakers have objected to the outgoing Bush administration’s use of the first $350 billion of the money, saying the government failed to set limits on banks including Citigroup Inc. and JPMorgan Chase & Co that got the cash.

‘Lack of Accountability’

Louisiana Republican David Vitter, who introduced the Senate resolution, criticized the “complete lack of accountability in the TARP program” in urging senators to block the remaining funds.

“If we don’t pass this resolution of disapproval, nothing will change in the TARP program,” he said.

California Democrat Barbara Boxer said she was voting to allow use of the second half of TARP because Obama will be in charge and will run the program differently.

“If the Bush administration was going to continue to dole out this money, I wouldn’t give them three dollars, let alone $350 billion,” Boxer said.

Under the rescue legislation, the Treasury Department can use the money unless Congress passes a resolution within 15 days turning down Bush’s Jan. 12 request for the second $350 billion made on Obama’s behalf. If Congress voted to block use of the money, the president could veto the resolution.

 

To contact the reporters on this story:

Nicholas Johnston in Washington at njohnston3@bloomberg.net;

Laura Litvan in Washington at llitvan@bloomberg.net

 

 

РБК, 16 янв -- Сенат США разрешил будущей администрации Барака Обамы использовать вторую половину антикризисного финансового пакета в 700 млрд долл., передает Associated Press.

Против резолюции Республиканской партии, выступавшей с критикой предоставления администрации Б.Обамы 350 млрд долл., проголосовали 52 сенатора, 42 сенатора поддержали позицию республиканцев.

12 января с.г. действующий президент США Джордж Буш направил в конгресс запрос на разрешение использовать вторую часть антикризисного пакета. По словам Б.Обамы, эти деньги должны быть направлены на реализацию его пакета антикризисных реформ. При этом 100 млрд долл. будут израсходованы непосредственно на помощь должникам по ипотеке.

Ранее Демократическая партия США выступила с новым пакетом антикризисных мер, который обойдется стране, по предварительным данным, в 825 млрд долл. Эксперты отмечают, что законопроект ожидают жаркие дебаты в конгрессе.

Между тем будущий вице-президент США Джо Байден считает, что антикризисный план должен быть одобрен во что бы то ни стало, поскольку состояние экономики страны "еще хуже, чем предполагалось ранее". По словам Дж.Байдена, в ближайшей перспективе "нет никаких других целей, кроме как спасти американскую экономику от коллапса".

Напомним, Б.Обама вступает в должность президента США через 4 дня.

 

 

 

 

 

 

2009.01.15 23:05:21   Nasdaq Ends Up 22 (1.5%) At 1512; IT, Commodities Strong

2009.01.15 23:03:48   DJIA Ends Up 13 At 8213; Snaps 6-Session Losing Streak   

2009.01.15 23:03:18   DJIA Ends Up 13 (0.2%) At 8213; BofA Off; Consumer Stks Up

2009.01.15 23:02:49   MARKET TALK: Agency MBS Spreads Widen Despite Fed Purchases

2009.01.15 22:58:51   Long-Dated Tsys Benefit On Bank Worries, 10-Yr 2.20%

2009.01.15 22:55:49   Obama Lauds House Stimulus Plan As "Significant Downpayment"

2009.01.15 22:52:29   Plane Had At Least 146 Passengers On Board, 5 Crew –TV

2009.01.15 22:52:26   CORRECT: Yellen Will Be A FOMC Voting Member In 2009

2009.01.15 22:52:23   CNBC: Jet May Have Been Trying To Return To Laguardia Airport

2009.01.15 22:49:52   FAA Says Plane May Have Struck Something, Possibly Bird -CNN

2009.01.15 22:49:32   Plane Was US Airways Flight 1549, Airbus A320 Jet -TV     

2009.01.15 22:49:17   Plane Went Down In Hudson Off Manhattan's 50th St -Fire Dept

2009.01.15 22:41:13   US Stimulus Could Be Big GDP Boost, Pay For 40% Of Itself-Study

2009.01.15 22:39:41   Canada Afternoon: C$ At 1-Mo Low As Oil Prices Fall Further

2009.01.15 22:39:45   Fed's Yellen: Time To Pull Out All The Stops To Aid Econ

2009.01.15 22:39:38   Yellen: Worldwide Recession Is Occurring     

2009.01.15 22:39:35   Yellen: Stress Is Seen Across Most Of US Economy

2009.01.15 22:39:29   Yellen: Deflationary Pressures Can Be Contained

2009.01.15 22:39:27   Yellen: Inflation Heading Below Desired Level

2009.01.15 22:39:15   Yellen: Unclear When Housing Sector Will Recover

2009.01.15 22:38:10   Yellen: US Economy 'Still Contracting Sharply'

2009.01.15 22:37:57   Yellen: Fed Could Increase Longer-dated Debt Buys

2009.01.15 22:37:54   Yellen: Market Conditions Are Still 'Abnormal'           

2009.01.15 22:37:51   Yellen: Fed Liquidity Facilities Have Helped Markets

2009.01.15 22:37:48   Yellen: Many Financial Markets Have Broken Down

2009.01.15 22:37:42   Yellen: 'Strong' Fiscal Stimulus Is Needed

2009.01.15 22:37:35   Yellen: Fed Has Been Aggressive, Can Do More If Needed

2009.01.15 22:37:38   Yellen: Repairing Markets Key To Fixing Economy    

2009.01.15 22:37:32   Yellen: Monetary, Fiscal Stimulus Are Both Needed   

2009.01.15 22:37:26   Fed's Yellen: Time To Pull Out All The Stops To Aid Econ

2009.01.15 22:34:17   OPEC Pres: New Ouput Cut Possible - Report          

2009.01.15 22:31:20   US Stocks Bounce As DJIA Hits 8000; BofA Worries Loom

2009.01.15 22:27:28   US Stocks Slip Into Red; DJIA Off 8; Nasdaq Up 21

2009.01.15 22:09:28   BOC WATCH: Still No Road Map For Trip To Zero

2009.01.15 22:04:13   Fed Buys $15.83 Bln Of Mortgage Bonds Guaranteed By Freddie

2009.01.15 22:04:32   Fed Buys $5.63 Bln Of Mortgage Bonds Guaranteed By Fannie

2009.01.15 22:04:45   Fed Buys $1.95 Bln Of Mortgage Bonds Guaranteed By Ginnie

2009.01.15 22:00:54   AT A GLANCE: US House Unveils $825B Stimulus Bill

2009.01.15 21:55:52   UPDATE: 7.3 Quake Hits Near Kuril Islands Off E Russia -USGS

2009.01.15 21:55:42   OIL FUTURES: Nymex Crude Settles At $35.40, Down $1.88

2009.01.15 21:53:52   EBRD: New EU Members Will Be Ready For Euro Zone 'Very Soon'

2009.01.15 21:52:14   Dollar, Euro Rally Vs Yen As Stocks Turn

2009.01.15 21:48:59   Fed's Evans Sees Bank Bailouts 'Once In A Lifetime' Action

2009.01.15 21:47:37   Possible BofA Guarantee May Use Additional TARP Funds-CNBC >BAC

2009.01.15 21:47:20   US Officials Discuss $100B-$200B Guarantee For BofA-CNBC >BAC

2009.01.15 21:44:33   Fed's Evans: Economy Has 'A Lot To Weather' In Next 18 Months   

2009.01.15 21:42:00   Fed's Evans: US Targets Troubled Assets, Japan Focused On Rates

2009.01.15 21:41:11   Fed's Evans: US Policy Response Flexible As Opposed To Japan In '90s

2009.01.15 21:40:14   Fed's Evans: Early '90s Japan Crisis Differs From US Woes

2009.01.15 21:35:38   US Stocks Pare Losses As DJIA Hits 8000 And Bounces     

2009.01.15 21:34:33   Fed's Lockhart: Can't Rule Out Future Coordinated Rate Cuts

2009.01.15 21:34:15   OIL FUTURES: Crude Approaches 5-Year Low On High Inventories

2009.01.15 21:31:59   OIL FUTURES: Nymex Crude Closes At $35.36/Bbl, Down $1.92

2009.01.15 21:21:03   Labor Union Starts Campaign Against Bank Of Amer Bailout Plan

2009.01.15 21:19:29   Bks Getting "Exceptional" TARP Aid Will Limit Dividends To $0.01 - Summers Letter

2009.01.15 21:17:14   Selling Back To Tsys As US Stocks Trim Losses

2009.01.15 21:15:30   Colombia Stocks Down, Tracking DJIA On US Bank Worries

2009.01.15 21:15:26   Fed's Evans: US In 'Serious Recession,' Joblessness Rising     

2009.01.15 21:15:23   Krauss Says It's Time To Cover Shorts

 

 

 

 

 

 

By Reg Curren

 

Jan. 15 (Bloomberg) -- Natural gas fell to the lowest level in more than two years in New York as government reports today on gas stockpiles, producer prices and manufacturing pointed to slower demand as the U.S. recession deepens.

Supplies declined 94 billion cubic feet last week, less than the 102 billion analysts expected, an Energy Department report showed. Prices paid to producers in the U.S. dropped for the fifth straight month and manufacturing in the New York and Philadelphia areas shrank. Reduced demand from factories and power plants has helped send gas down 15 percent this month.

“We’re really in a deflationary environment and it’s feeding on itself,” said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. “The producer price numbers are very deflationary.”

Natural gas for February delivery fell 12.7 cents, or 2.6 percent, to settle at $4.843 per million British thermal units at 3:25 p.m. on the New York Mercantile Exchange. The futures declined for the seventh time in eight days to the lowest settlement price since Sept. 27, 2006, when gas closed at $4.201.

Supplies may exceed demand by as much as 5 billion cubic feet a day on higher production and reduced consumption, said Scott Speaker, JPMorgan Chase & Co.’s natural gas strategist.

“The trajectory of rigs being laid down, if you smooth it over time, is not catching up to the somewhat accelerating decline in industrial demand,” Speaker said. “Yesterday, Nissan America said they were going to four-day work weeks.”

Work Week

Nissan Motor Co.’s U.S. unit joins other carmakers, including Chrysler LLC, General Motors Corp. and Ford Motor Co. in slowing output. Other big consumers of natural gas, including chemical makers Dow Chemical Co. and DuPont Co. and Alcoa Inc., the world’s largest aluminum maker, announced production cuts in the past month.

Gas inventories last week were 3.1 percent higher than the five-year average, little changed from a 3.2 percent surplus the previous week, the Energy Department report showed.

The Labor Department said prices paid to producers fell last month as demand for raw materials collapsed. Industrial demand accounts for 29 percent of U.S. gas usage.

Manufacturing in New York contracted for a ninth straight month in January, and a gauge of expectations for six months from now was negative for the first time on record, according to a report today from the Federal Reserve Bank of New York.

In the Philadelphia area, manufacturing shrank for the 13th time in the past 14 months as employment dropped, according to a separate report from The Federal Reserve Bank of Philadelphia.

Lowering Thermostats

“Supply is there, demand is not and that’s the bottom line,” said Kyle Cooper, an analyst at IAF Advisors in Houston. “The temperatures we saw across the country last week indicated we should have drawn between 130 and 150 billion cubic feet.”

The slowing economy, in addition to cutting industrial use, may also be prompting residential consumers to cut down on heating, Cooper said.

If all U.S. households lower their thermostats by 1 degree for a week, it trims gas demand by 10 billion cubic feet for that period, he said.

“The combination of people lowering thermostats, less industrial demand and adequate supply means you’re just not pulling out of storage as you would expect,” Cooper said.

Demand for gas as a heating fuel was lower last week before a cold front moved into the Midwest and East. Heating needs were 6.5 percent below normal in the Midwest and 2.6 percent below normal in the Northeast, David Salmon of Belton, Missouri-based Weather Derivatives, said in a note on Jan. 12.

Nationwide, heating requirements were below normal for the second consecutive week, he said.

Residential usage accounts for about 20 percent of U.S. gas consumption, according to the Energy Department.

 

To contact the reporter on this story:

Reg Curren in Calgary at rcurren@bloomberg.net.

 

 

Commentary by Michael R. Sesit

 

Jan. 16 (Bloomberg) -- Can the Obama effect last?

The U.S. president-elect is so admired, engenders such high aspirations and is such a wellspring of hope that no one could meet these expectations. That’s bad news for financial markets.

Barack Obama is four days from entering the White House with more at stake than any president since Franklin Delano Roosevelt.

So far, markets are betting that he will succeed. The Standard & Poor’s 500 Index has rallied 12 percent since Nov. 20. And from 2.06 percent on Dec. 30, the yield on the 10-year U.S. Treasury bond has risen to 2.20 percent, suggesting the flight- to-safety trade has abated somewhat. Meanwhile, the dollar has advanced 9.7 percent against the euro since mid-December.

The make-up of Obama’s economic team was leaked to the press on Nov. 21 and formally revealed a few days later.

The group is impressive. Federal Reserve Bank of New York President Timothy Geithner was designated to be the new Treasury secretary. Lawrence Summers, former Treasury secretary in Bill Clinton’s administration, was tapped to head the National Economic Council, with the smart money betting he’ll take over the Federal Reserve in 2010. And Paul Volcker, a highly respected former Fed chairman, was named to head an economic advisory board.

Optimism surrounding the appointments was so high that the SnP 500 wracked up its biggest four-day rally since 1933.

The euphoria may be overdone.

Bank Lobbying

Vested interests in the financial community, lobbying by banks and other institutions, and congressional resistance might stymie the much-needed redesign of the U.S. regulatory structure.

Lawmakers, angered at the Bush administration’s handling of the first $350 billion of the $700 billion Troubled Asset Relief Program, might not approve release of the second half. Failure to do so would have a “negative” impact on markets, House Financial Service Committee Chairman Barney Frank said this week.

Foreign investors may balk at financing a U.S. budget deficit that the Congressional Budget Office projects will grow to $1.2 trillion this year even without new spending being approved. Investors might conclude -- many economists already have -- that Obama’s plans for an additional $775 billion two- year stimulus program aren’t enough to resuscitate the economy.

The proposed package was caught in crossfire last week between lawmakers favoring more outlays for social programs, conservatives opposed to increased spending and moderates concerned about growing deficits.

Scandals and Infighting

The president-elect’s popularity, like any head of state’s, will also be vulnerable to the demands of domestic constituencies such as labor unions, to scandals and infighting within his administration, and to foreign-policy setbacks.

New Mexico Governor Bill Richardson, nominated to be Commerce secretary, has already had to withdraw his name from consideration because of an investigation into a contract awarded to a company run by a political donor.

Potentially more damaging are revelations of Geithner’s past tax difficulties, which, even if he’s confirmed as Treasury secretary, would leave him as damaged goods. The stock market plummeted 4 percent at one point on Jan. 14, after the issue became public.

In short, the pressures of office are such that no president can permanently escape alienating the politically powerful or antagonizing sizable segments of the population. Adapting from Abraham Lincoln, you can please some of the people all of the time, all of the people some of the time, but you can’t please all of the people all of the time.

‘Profound Irresponsibility’

Although he has begged off commenting on some issues, especially foreign affairs, saying the U.S. has only one president at a time, Obama has moved forcefully in the financial and economic arena. He has mostly managed expectations deftly -- regardless of the brouhaha over the proposed stimulus package -- prodded Congress to act on his requests and made sure his predecessors and Wall Street carry the can for the country’s mess.

Obama last week blamed the economy’s troubles on “an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, D.C.”

In another populist move, the new administration will direct the Treasury to limit executive pay, dividend payments and stock buybacks by financial institutions that get “exceptional assistance” from the TARP, Summers wrote to Congress leaders.

“There is a devastating economic crisis that will become more difficult to contain with time,” Obama said at a news conference last week. “Today, we face a world of unconventional challenges from the spread of stateless terrorist networks and weapons of mass destruction to the grave dangers posed by failed states and rogue regimes.”

Agent of Change

A day earlier, he offered a bleak description of the U.S. economy that was seemingly designed to push Congress to pass the stimulus package. Obama portrayed a country where the unemployment rate is accelerating, family income is falling and “a generation of potential and promise” may be lost without prompt Congressional action.

“I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action,” he said. “If nothing is done, this recession could linger for years.”

As a candidate, Obama ran as an agent of change. If he is prevented from implementing that commitment, the market consequences will be severe. That’s the price of being regarded as a messiah, even if he never sought the epithet.

 

(Michael R. Sesit is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column:

Michael R. Sesit in Paris at at msesit@bloomberg.net

 

 

By Shobhana Chandra and Bob Willis

 

Jan. 15 (Bloomberg) -- First-time claims for unemployment insurance climbed and prices paid to U.S. producers tumbled, signaling no end to the job-market rout and collapse in raw- materials prices spurred by the deepening recession.

Initial jobless claims jumped to 524,000 in the week ended Jan. 10, the Labor Department said today in Washington. Producer prices fell 1.9 percent, capping the first annual drop since 2001. Separately, the Federal Reserve said manufacturing in the Philadelphia and New York regions shrank further in January.

The figures show the impact of a worsening global economic downturn that is hammering companies including Alcoa Inc., General Electric Co. and engine-maker Cummins Inc., which all announced additional job cuts this month.

“Economic conditions in the United States, and indeed in much of the world, are weak and deteriorating rapidly,” Christina Romer, President-elect Barack Obama’s nominee to lead the White House Council of Economic Advisers, told lawmakers today. Job losses show “no evidence of stopping” and credit flows “have not been restored,” she said.

The Standard & Poor’s 500 Stock Index closed up 0.1 percent at 843.74. Treasuries ended little changed, with benchmark 10- year yields at 2.21 percent at 5:16 p.m. in New York. The dollar was also little changed at $1.3127 per euro after the deteriorating economic outlook in Europe prompted the European Central Bank to cut interest rates today.

Factory Gauges

The Fed Bank of Philadelphia’s general economic index was minus 24.3 this month compared with minus 36.1 in December. The New York Fed’s Empire State index was at minus 22.2, from a revised minus 27.9 in December that was lower than previously reported. Readings below zero indicate a contraction.

“The economy is in horrible shape and probably getting worse,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “All of the trends that have been in place are worsening. The downward momentum is building in the labor market, there’s pressure on consumers and tight credit.”

Obama, who takes office Jan. 20, is pressing for quick passage of a stimulus plan that may exceed $800 billion that would cut taxes, boost infrastructure spending, and create jobs.

“Well designed, aggressive government policies will make a crucial difference,” Romer, a professor of economics at the University of California, Berkley, said in testimony at her confirmation hearing at the Senate Banking Committee.

Fifth Decline

The drop in the producer-price index in December was the fifth straight monthly decline and followed a 2.2 percent decrease in November. Excluding fuel and food, the so-called core rate rose 0.2 percent after a 0.1 percent increase.

Falling commodity costs and asset values are raising concern among some Fed officials about the danger of deep and extended price decreases that would worsen the economic downturn.

Fed officials last month discussed setting an explicit target for inflation to discourage expectations that price increases will slow “below desired levels,” according to minutes of the Dec. 16 meeting released last week.

Some policy makers saw “significant risks that inflation could decline and persist for a time at uncomfortably low levels,” the minutes said.

Outlook for Prices

“The recession will continue through most of the year, and in this environment, producer prices can only move downward,” said Sal Guatieri, an economist at BMO Capital Markets in Toronto, who forecast a 2 percent drop in PPI.

Prices paid to factories, farmers and other producers were forecast to decline 2 percent, according to the median estimate of 77 economists in a Bloomberg News survey. Core prices were projected to rise 0.1 percent for a second month, the survey median showed.

The increase in jobless claims last week exceeded the median forecast of economists surveyed by Bloomberg for a reading of 503,000. The previous week’s initial claims were revised to 470,000 from the 467,000 initially estimated.

Alcoa, the largest U.S. aluminum producer, this month reported its first quarterly net loss in six years and said it will further cut output in 2009 if demand continues to weaken. Aluminum prices are at five-year lows as automakers, builders and appliance manufacturers cut orders.

“The aluminum industry is caught up in a perfect storm of historic proportion,” Chief Executive Officer Klaus Kleinfeld said on a conference call with analysts on Jan. 12. “Inventories are building and prices are decreasing.”

Producer prices are one of three inflation gauges reported by the Labor Department. Prices of goods imported into the U.S. fell for a fifth consecutive month in December, figures showed yesterday.

A report tomorrow may show consumers’ cost of living decreased 0.9 percent in December after a 1.7 percent drop the previous month that was the biggest since records began in 1947, according to the Bloomberg survey.

 

To contact the reporters on this story:

Shobhana Chandra in Washington at schandra1@bloomberg.net;

Bob Willis in Washington bwillis@bloomberg.net

Last Updated: January 15, 2009 17:18 EST