Who would have thought that the best friend of a US$ bull would be Kim
Jong Il but it was North Korea’s missile and nuclear test that bounced
the $ after 5 days of selling last week. Commodities are lower as a
result and helping to pressure crude is the realization (as expected)
that nothing new will come out of the OPEC meeting on Thursday after the
Saudi oil minister said they will ‘stay the course.’ US$ 3 mo LIBOR rose
after 38 straight days of decline which took its spread to fed funds to
the lowest since March ’08. Some can attribute the fall to the thawing
of the credit markets but its more likely due to a flood of deposits
into banks and an implicit guarantee of the viability of the large banks
thus making interbank lending relatively risk free. Yesterday Germany’s
IFO was a touch less than expected and the current outlook fell to a
record low dating back to ’91. S&P/CaseShiller HPI is expected to fall
18.4%.
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