The Obama stimulus package, now provisionally set at about $775 billion over two years, but sure to grow as it makes its way through the halls of Congress, has in many quarters been compared to FDR's New Deal of the 1930s. Certainly the economic conditions facing Obama more closely match those faced by FDR (although not as dire) than those faced by any of the postwar presidents. The only two post-war downturns of comparable magnitude were quite different animals, particularly on the inflation front.One of the themes we will see as the package gets debated -- particularly by those who think there is wisdom to be found in the editorial pages of The Wall Street Journal -- is that "The New Deal didn't work; only WWII solved the Depression." This is, in fact, complete and utter hogwash. The New Deal was extremely effective, particularly while the economic ...

pJan 5, 2009 (WALL STREET JOURNAL) -- As the U.S. seeks to stockpile oil, China has been doing the same, observers say, and is expected to quicken the pace -- a development that already may be helping to boost oil prices./ppOn Friday, the U.S. Department of Energy said that amid low oil prices, it aims to fill the country's Strategic Petroleum Reserve to capacity this year./ppThat news followed a rare public statement last week from China's top energy official, Zhang Guobao, head of the National Energy Administration, in the People's Daily newspaper that China should take advantage of the falling global energy demand to increase its oil reserves. Mr Zhang said China will quot;encourage companies to utilize idle storage capacity to increase inventories.quot;/ppOil prices have been rising lately. On Friday, oil closed up 3.9% to $46.34 a barrel on the New York Mercantile Exchange./ppThough China doesn't disclose its oil inventories ...

The currencies rally back! …  The risk takers are back! …  Mixed bag of economic reports…  A “cross thing” for sterling… And Now… Today’s Pfennig!

Well, front and center this morning is a rally in the currencies that began yesterday mid-morning, and has carried through the Asian and European markets. I’d tell you why the euro is 2.5 figures above yesterday morning’s level, but you’d laugh at me… No wait! That’s what you’re supposed to

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pJan 6, 2009 (WALL STREET JOURNAL) -- In an early sign that some steel prices may have bottomed out, steelmakers in the U.S., China and some other countries are attempting limited price increases and reopening a handful of mills that were closed because of weak demand a few months ago./ppnbsp;/ppIt isn't clear whether the price increases will stick, however. Steel sellers often announce price increases or special surcharges, only to relent in the face of customer opposition or if rivals don't follow suit. Nor is it clear whether the price increases reflect more demand or lower inventories.br /nbsp;/ppTroubled auto makers, contractors, appliance and equipment makers have cut back on their steel purchases. The majority of mills closed over the last few months remain shuttered and many around the world are operating below 50% of their capacity./ppnbsp;/ppBut steelmakers signaled cautious optimism that there is enough demand to support price increases in ...

A Wall Street Journal article published today (1/7/09) talks about recent efforts of steel producers around the world to open up select mills, in a sign that the market for steel may have bottomed. From their mid-2008 highs, steel and iron ore prices have slipped 40% as a weakening global economy and financial crisis has slowed demand for cars, houses and other durable goods. However, there are many factors that suggest that this commodity, so heavily correlated to economic activity, may have bottomed and may gain steam in 2009.Since the decline in global steel prices, producers have been quick to cut production. Several global steel/iron ore producers such as ArcelorMittal (MT), AK Steel Holdings (AKS), BHP Billiton (BHP) and Baosteel Group have cut 2009 production by 25-30%, hoping to stem further price deterioration.Producers have been opening mills back up selectively, ...

“Made in China” is a hair-trigger slogan that would often ignite a tirade about lost jobs, junky products and sweatshop labor. Well, it looks like “Made in China” will be a relic of the past as the Communist Party goes up-market.

The People’s Daily reported today that China’s Coordination Bureau under Ministry of Industry and Information Technology (MIIT) will replace “Made in China” with “Created in China.” The intent is show the world that China is no longer a copycat maker of disposable junk, but has risen to become a true manufacturing innovator.

Why should investors care?

Because China’s transition to a high-quality manufacturer comes at a time when the economy is softening — perhaps prolonging a slump in stocks, real estate and exports.

For example, the Wall Street Journal ran a story today that speculated China’s economy could be worse than stated by government agencies.

China’s economic policy has been to maintain a minimum

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Borders Ousts CEO; Front Page Ads in New York Times; Steve Jobs Speaks, Apple Soars; U.K. Short Selling Ban Ending; Whitman’s Future; Oil Rises on MidEast Violence; Russia Cuts Gas Supplies to Europe

Borders Group, Inc. (BGP) ousted its Chief Executive George Jones and replaced him with outsider Ron Marshall, a Wildridge Capital Management executive whose primary experience is turning around ailing companies, Reuters reported. George had been Borders’ CEO for the past three years. The New York Times Co. (NYT) opened its front page to advertisers, a controversial move within journalism circles but also one that follows ...

 

 

Fuzzy Math

The Wall Street Journal has another article taking off from an original piece done nearly two weeks ago at TheStreet.com  on how leveraged exchange-traded funds don't always provide the perfect mathmatical returns that would seem readily apparent.

It's a fairly routine story that has been re-reported several times since the original popped up online. These re-examinations for investors of how inverse and leveraged ETFs work -- and how their returns are calculated on a daily basis -- have been showing up lately coming on the heels of huge distribution projections by Rydex and later ProShares for their leveraged ETFs. 

You can read the WSJ's version here.

 

Year In Review

An update of the Dow Jones Newswires' review of 2008 ETF performance can be found here.

 

Famed Vanguard Manager Neff Buying Stocks

It's always an interesting game keeping up with the more renowned active fund managers. In this piece from Fortune,

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The dollar bounces!  ISM was simply awful!  Oil rallies…  Jobs Jamboree this Friday… And Now… Today’s Pfennig! Although, technically, it’s still the Christmas season (it doesn’t end until Jan. 11), the Santa rally that pushed the euro to 1.45, has gone away, and we’re on to the next phase, which I drew out for you over a week ago… And that is… The Obama bounce… This is something we’ll have to deal with for the next few months. It all began with a huge stock rally on Friday, and that won’t be the last one during the Obama bounce.

The dollar is kicking up its heels once again, and this is to be expected during this Obama

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Euro gains, then loses, then gains…  Inflation and Commodities…  The euro turns 10!  Risk Aversion remains but is waning… And Now… Today’s Pfennig! Remember those Wild Swings I talked about yesterday? The Wild Swings that could be a result of thin volumes in this the second week of Christmas. Well… We witnessed them in earnest yesterday! As I signed off yesterday, I told you that the euro had rallied 2 whole figures to 1.43 and change. Well, that rally dissipated throughout the morning, and by late in the day the single unit was 1.39 and change… WOW! Now that’s a Wild Swing!

You can point to profit taking as the reason for the move,

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