Gloomy economic picture fuels risk aversion… Financials, energy, retailers among top drags… Dow off 4.3 pct, S&P 500 off 5 pct, Nasdaq off 5.3 pct

U.S. stocks tumbled on Monday as signs of further deterioration in the economy around the world punctured last week’s market enthusiasm, with financial services companies and retailers among Wall Street’s biggest drags.

Major industrial companies also contributed to losses on signs global demand is faltering, leading investors to pare back risk in favor of safe-haven government debt.

With the holiday shopping season under way, investors feared that retailers may turn in their bleakest sales in many years. The S&P retail index declined 4.4 percent.

Department store Macy’s Inc tumbled 9.6 percent.

Consumers made repeat trips to stores and spent more on bargains this weekend, but analysts said the rush is unlikely to translate into a much-needed boost in profit.

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Pack a lunch and blow the froth off a cool one…as I’ve got three days of gold and silver market activities to talk about…and lots of fascinating reading as well.

Wednesday, November 26th

This was the last day for all parties to get their gold and silver contracts switched to the 2009 year…or they would have to stand for delivery on Friday. With the U.S. in holiday mode almost from the beginning of trading, the tiny rally at the Comex open was stepped on and never recovered. But it hardly mattered…as volume was virtually non-existent. Silver was the same. Call the day a big zero. However, the shares reacted otherwise. Even though gold was down ten bucks at the close of the equity markets, the HUI still managed a surprising 6% increase…the second day in a row that gold has been flat or down…and the HUI up. Hmmm!

Open interest on Tuesday showed

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When it comes to the financial markets, September was a startling and unsettling month that Americans may never forget. We have witnessed the collapse and/or government rescue of financial services giants that are household names. The financial fears of the public and the resulting stock and bond market volatility have prompted the Federal Reserve and the U.S. Treasury to resort to bailouts and backstops on a historic scale.

What does it all mean for the future of our financial system? While cringing at the potential expense, some experts seem to agree with government officials that intervention is most likely necessary, and that the costs of these measures outweigh the potential risk of doing nothing in the midst of a crisis of confidence.

Here’s a look at what may have prompted this situation, what has transpired recently in the financial sector, and how the government has acted to stem the negative effects of

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div style="text-align: justify;"UBS is out somewhat negative on span style="font-weight: bold;"Bank of America (NYSE:BAC)/span noting that they recently lowered target prices for many of our bank stocks (with BAC one of the few left unchanged). The lowering of BAC target price to $15.50 from $29 today reflects: 1) Firm's outlook for tighter credit availability, which will likely lead to higher credit losses for banks in general in 09 (incl at BAC); 2) Greater uncertainty over the near-term prospects of the MER deal—reflecting both concern over further writedowns at MER and downside bias to MER’s EPS power; and 3) risk of additional writedowns at BAC given recent widening of credit spreads (even after yesterday’s tightening)br /br /span style="font-weight: bold;"Lower credit availability likely to lead to higher losses in 2009/spanbr /br /In BAC's view, credit availability will likely remain tight into 2009 as banks focus on maintaining sufficient capital and liquidity levels ...

Now this is a very interesting question, isn't it? The only honest answer I can give is that I don't know, and indeed I haven't the faintest idea. The government of Latvia (the Baltic state which is currently most rife with "rumours" about imminent devaluations) works in its own wondrous ways, and neither we (nor Latvia's citizens) have any idea at all how they plan to lift their country out of the deepest depression they have experienced in many a long year.br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SRQ9-7COE2I/AAAAAAAALWc/3VxjefQe-0s/s1600-h/latvia+GDP.png"img id="BLOGGER_PHOTO_ID_5265902015511139170" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 320px; CURSOR: hand; HEIGHT: 200px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SRQ9-7COE2I/AAAAAAAALWc/3VxjefQe-0s/s320/latvia+GDP.png" border="0" //abr /br /What I do know is that, economically speaking,the present situation is simply unsustainable, and something is going to have to be done. Indeed the country's government is in talks with both the IMF and the EU Commission about this very topic as I write. My ...

Paulson says no to automakers…  Currencies trade in a tight range…  Richard Russell on a Wednesday!  TIC Flows improve… And Now… Today’s Pfennig!

Good day… And a Wonderful Wednesday to you! OK… Are you up on these “pirates” stories going on right now? That’s pretty unbelievable, eh? And… We are all fans of “pirates” here on the Currency Trading Desk, but these guys now are giving “our pirates” a black eye!

The currencies range traded yesterday in a very tight range, as Treasury Sec. Paulson, didn’t give in to the lawmakers and allocate $25 Billion of the TARP (Troubled Asset Relief Program) funds to automakers. King Henry said, “The rescue (read bailout!) package was not intended to be an economic stimulus or an economic recovery package. The $700 Billion TARP was designed to stabilize financial markets and the flow of credit, and it not a panacea for all our economic difficulties.”

Well… For

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Welcome to the Fantasyland issue of The 5…“Shouldn’t worry about the deficit,” assures Barack Obama… “yes we can” keep spending. Can’t balance the budget of your dreams? Call the Treasury… Atlanta’s doing it. Gold still suffering… Ed Bugos’ future fantasies for precious metals stocks. Plus, no one immune to the great housing illusion… the infamous Neverland Ranch shuts its doors.

“We shouldn’t worry about the deficit next year or even the year after,” the U.S. president-elect Barack Obama said on 60 Minutes over the weekend.

We were afraid that Barack’s message of “change you can believe in” was going to make it harder to take issue with politics as usual in Washington. But now we see he already drank the Kool-Aid and we had nothing to fear but fear itself.

“The consensus is this, that we have to do

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Bank of America Corp. (BAC) will almost double its stake in state-owned banking giant China Construction Bank Corp., and will control nearly 20% of China’s second-largest bank when the deal is finalized. The official announcement yesterday (Monday) ends months of speculation that the Charlotte, N.C.-based BofA would dump part of its three-year-old investment the Beijing-based bank to offset the effects of the global financial crisis. In an article on Saturday, Money Morning reported that the deal was close, though noting that the actual timing was unknown. Bank of America plans to be “a long-term and significant strategic investor in CCB,” the U.S. lender said in a statement. The shares to be acquired to carry a restriction, however: They can’t be sold before Aug. 29, 2011, unless the China bank provides special permission. According to Caijing– the influential China ...

For a company that is begging for free government money, Bank of America is still spending lots of money.BofA increased its stake in China Construction Bank from 11% to 19% today. As stupid as BoA has been with its money, you have to wonder if this is the kiss of death for China Construction Bank.

This week is shaping up to be another active one on the bailout-and-financing front. First and foremost, Congress returns to work this week to consider a once-unthinkable proposal: Put up billions in taxpayer-backed loans so that Detroit’s “Big Three” can be saved. Expect a fight, however, as the bailout debate finally moves past banks to focus on General Motors Corp. (GM), Ford Motor Co. (F), and Chrysler Corp.

The situation is dire. GM is burning through cash at a pace that could mean bankruptcy, and all three players are struggling with high costs, weak vehicle sales, frozen credit lines and dwindling cash reserves calling into question whether they can survive much longer without government help. The answer, of course, is that they probably can’t.

But it’s here that the debate turns political, the Detroit Free Press reports. Congressional Democrats are pushing for some form

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