Recession Anchors Trade

In a faraway corner of the Pacific is anchored the world's ghost fleet of cargo ships as far as the eye can see, with no cargo, no crews -- and no place to go.

The out-of-work fleet -- larger than the combined navies of the US and Britain -- stretches for 20 miles off the coast of Malaysia as an eerie symbol of the recession's wipeout of world commerce.

Economists say that normally these 500-plus container vessels, oil tankers and merchant ships would be steaming between the ports of Asia and the US laden with cameras, jeans and all sorts of goods for retail shelves this Christmas. Instead, the mammoth ships have been moored for months, with only a guard or two on decks to watch for marauding pirates.

Owners from all over the industrialized world tie up their empty vessels along the stretch of international waters 50 miles from Singapore's harbor because it's cheap and is off the beaten path for pirates, at least for now. Local fisherman say they're afraid to venture toward the lifeless armada because they see no movement aboard and believe evil spirits have turned the vessels into ghost ships.

Maritime brokers say the world's top shipping companies are struggling to stay afloat, with cargo loads down by half this year, according to the Baltic Dry Index, which tracks most maritime tonnage. By 2012, one in four commercial ships will be idle, analysts predict.

Resource stocks hit as Europe debt worries heat up
http://www.marketwatch.com/story/brazil ... iteid=nbsh

LOS ANGELES (MarketWatch) -- Brazilian equities dropped nearly 5% Thursday, sliding alongside regional markets, as investors dumped commodities and resource-related stocks as their fears about sovereign-debt troubles in Europe ramped up.

Commodity prices were hit as the U.S. dollar reached a seven-month high against the euro, pushing the dollar index /quotes/comstock/11j!i:dxy0 (DXY 79.88, +0.51, +0.64%) up 0.6% to 79.85.

"The sell-off is simply to a reaction to the stronger U.S. dollar because of renewed fears of sovereign debt problems in Europe, in connection with Greece and also in connection with Portugal and Spain," said Patricia Mohr, a commodity market specialist at Scotiabank Group in Toronto.

A stronger U.S. currency typically pressures oil, gold and other dollar-denominated commodities as it makes them more expensive for holders of other currencies.

The commodity-rich Bovespa index in Brazil slid 4.6%. None of the 65 stocks listed on the index produced price gains in recent trades. Shares of state-run oil giant Petrobras /quotes/comstock/13*!pbr/quotes/nls/pbr (PBR 39.06, -2.34, -5.65%) , which account for 12% of the index, slumped 3% as oil prices dropped 5.3% to $72.92 a barrel. Read more about oil prices.

In Portugal on Thursday, the cost of insuring the nation's debt against default soared to an all-time high. On Wednesday, the European Commission gave cautious approval of Greece's plan to slash its budget deficit over the next three years. Read about euro-zone credit concerns.

Back in Latin America, Argentina's Merval index fell 3.6% on Thursday as local shares of Petrobras fell 5.3% and steel-tubes maker Tenaris /quotes/comstock/13*!ts/quotes/nls/ts (TS 43.40, -1.75, -3.88%) shares lost 3.2%. Banking stocks were also hit, led by Banco Macro /quotes/comstock/13*!bma/quotes/nls/bma (BMA 25.78, -1.78, -6.46%) , down 7.4%, a day after Argentina's president unexpectedly nominated a political ally to head the country's central bank.

Mexico's IPC index fell 1.9%, with shares of copper miner Grupo Mexico /quotes/comstock/!gmexico b (MX:GMEXICO B 27.97, -0.42, -1.48%) down 3.1% and mining concern Industrias Penoles shares declined 3.3%.

Gold for April delivery slumped 4.4% to finish at $1,063 an ounce at the New York Mercantile Exchange. Copper for March delivery fell 3.1% to end at $2.88 a pound.

Meanwhile, shares of Telefonos de Mexico /quotes/comstock/13*!tmx/quotes/nls/tmx (TMX 15.74, -0.93, -5.58%) stumbled 4.8% and led market decliners after the fixed-line operator's fourth-quarter results left investors disappointed.

The results were "mediocre," wrote Rizwan Ali, head of research at Deutsche Bank, in a note to clients. Telmex's earnings before interest, taxes, depreciation and amortization of $12.2 billion pesos was 7.3% below the broker's forecast, resulting in margin of 41.2% compared with its estimate of 44.1%.

"Despite revenues in-line with our forecasts, 5% lower interconnection expenses were not able to offset 12% higher cost of sales and services," wrote Ali.

Chile's IPSA fell 1.7%.

Financial sector ETF set for worst day in a year
http://www.marketwatch.com/story/financ ... iteid=nbsh

NEW YORK (MarketWatch) -- The bellwether ETF tracking the S&P 500 financial sector was headed for its worst percentage decline in almost a year on Thursday. With less than an hour to go in the trading day, the Financial Select Sector SPDR ETF [s; xlf] was off 3.5%. That's the fund's biggest decline since it fell 3.5% on February 23, 2009.

Portugal near political crisis over debt
http://www.ft.com/cms/s/0/76aa4a50-11d9 ... ab49a.html

Portugal moved towards a political crisis on Thursday night as its finance minister appealed to opposition parties not to defeat the minority Socialist government over a regional finance bill that he said would undermine the country’s international credibility.

In a televised address, Fernando Teixeira dos Santos said opposition proposals to allow the Portuguese islands of Madeira and the Azores to increase their debt would have “grave consequences for Portugal’s public accounts” and send “the worst possible message” to financial markets.

His warning came as Portuguese bonds and shares came under fire for the second day running as concerns over sovereign debt spread from Greece to other high-deficit countries in the eurozone.

The Lisbon stock market fell almost 5 per cent on Thursday, the biggest daily fall since November 2008, and bond yields rose to new highs amid doubts over the ability of Portugal to consolidate its public accounts.

The cost of insuring Portuguese debt against default also rose to a record high.

Mr Teixeira dos Santos said approval of the bill would involve an increase of €50m (£45m, $70m) in funding for the islands this year, rising to an increase of €83m in 2013. This would make it impossible for the government to meet its commitment to the European Commission to cut the budget deficit from 9.3 per cent of GDP in 2009 to less than 3 per cent in 2013.

The centre-right Socialists were re-elected to a second four-year term in September, but lost their overall majority in parliament. The contested bill is supported by opposition parties on the left and right who together have enough votes to defeat the government.

Opposition parties accused the government of “irresponsibility” and deliberately creating a crisis to ensure the bill was defeated.

Earlier on Thursday, Mr Teixeira dos Santos said “strong and credible” measures to be presented the European Commission this month would be “no less ambitious” than the Greek plan to consolidate public finances endorsed by Brussels on Tuesday.

He said Portugal had taken over from Greece as the main victim of the “animal spirits” of financial markets that were often “irrational”. The concern in the case of Portugal, he said, was not justified.

International markets in big selloff
http://money.cnn.com/2010/02/05/news/in ... /index.htm

NEW YORK (CNNMoney.com) -- International stock markets tumbled Friday over concerns about the debt crisis in several European nations.

Global markets plunged across the board. The FTSE in London and the DAX in Frankfurt both fell more than 1% in midday trading amid fears of potential credit defaults by Portugal, Spain and Greece.

Japan's Nikkei index ended nearly 3% lower, while Hong Kong's Hang Seng index tumbled 3.3%.

European debt concerns riled Wall Street on Thursday, dragging down the Dow by 268 points. U.S. futures were down on Friday, indicating that Wall Street could take another hit.

"It all has to do with the meltdown in Europe," said Peter Cardillo, chief market economist for Avalon Partners. "Right now, the market is still traumatized over the debt in Greece, Portugal and Spain, and that's basically what caused the decline."

The big question now, said Cardillo, is how long it will last.

"Will the market be convinced that this is a temporary storm causing a correction, or is this something more long-lasting that will impact the global economy?" he said.

Un(Employment) Friday 2/5
http://market-ticker.org/archives/1936-UnEmployment-Friday-25.html

The data continues with the January Employment Situation Report.

The top-line was a loss of 20,000 jobs but the unemployment rate "as reported" fell from 10.0 to 9.7%.

This was good for an almost-immediate 10 point ramp in the futures, exactly as I had talked about last night in the video - the potential for anything "in line" to provoke a snapback was quite real, and it became realized - at least until people actually read inside the report, that is!

But one must dig into the report and try to determine if we're seeing real improvement, or whether we've got statistical adjustments, remembering that January is a difficult month under the best of times because of benchmark and annual revisions.

And here we find some problems.

First, let's start with the good news: