Morning Reading – Monday, February 14, 2011

JESSE’S CAFÉ AMÉRICAIN: Silver in Backwardation and the Emperor, Once Again, Nearly Naked

Growing panic in Paperville. The central banks have no silver, and the Comex is being depleted. Interesting that the SLV ETF inventories are experiencing large outflows. The patriotic miners are being called upon to hedge their deep storage inventories, that is, unrefined metal in the ground, to provide more paper.

FT BecondBRICs: It’s official: China has overtaken Japan

Japan’s GDP figures released on Monday make it official: China over took Japan during 2010 to become the world’s second biggest economy in nominal terms.

FT BecondBRICs: Fund file: EM debt boost for active managers

Analysis conducted last year by FundQuest, an arm of BNP Paribas, suggested that of 73 investment categories over the past 30 years, the arena where active managers added the most value was, by some distance, emerging market debt.

FT Alphaville: Japan’s savings rate about to go negative, Goldman says

Japan has just announced that its national savings rate rose to 5 per cent in 2009, from 2.2 per cent in 2008. But already some analysts are predicting a sharp reversal in the trend. Goldman Sachs’ Chiwoong Lee thinks the rate is about to turn negative.

FT Alphaville: Philly Fed forecaster survey catches up to reality

Yes, we know, we know — forecasts are nonsense. It’s practically our motto around here.

But we post the Philly Fed’s quarterly survey of professional forecasters to keep track of shifts in sentiment among private-sector economists, if only to see how slow they are to change their minds.

FT Alphaville: China’s vanishing forests?

Now China Forestry remains suspended. No reasonable questions are being answered – so I am going to reveal to you the Analyst gossip: the bulk of the forests do not exist. Sure they had some “front” – plantations they would take potential investors to. But the vast bulk of the business was a fiction and “accounting irregularities” is code for “fiction”.

WSJ Blogs / Deal Journal: Explaining Why Goldman is the Biggest Investor in Its Own Client

Goldman Sachs disclosed yesterday that it held a 6.8% stake in biotech company Genzyme. Why is that significant?

Well, Goldman Sachs also is advising Genzyme in its ongoing sale process –Genzyme is enmeshed in a takeover dance with French pharmaceutical firm Sanofi-Aventis. And now Goldman is, on paper at least, the largest outside shareholder in a company the Goldman bankers are trying to sell.

Daily Finance: Is Oil Output Peaking or Not? Either Way, Cheap Oil Is Gone for Good

Either way, barring another long global recession, one thing at least is certain: The era of cheap oil is over. It’s highly unlikely that the U.S. will ever see $1.50-a-gallon gasoline again. Indeed, if global oil demand continues to climb, the current $3.11 per gallon average U.S. price for regular unleaded may look cheap in a few years.

The Slope of Hope: Bear Capitulation?

Change in bearish sentiment in the air? Perma-bears starting to give up the ghost? The signs are everywhere. From this blog to the few remainind bear blogs, the bears are giving it up. Lot fewer “top callers” out there and I suspect the few that continue to call tops either do not trade or have little “skin” in the game.

The Slope of Hope: COT Report Week Ending 2/8

Not a whole lot of conclusions to be drawn from this week’s COT report. The commercial positions for Oil and SPX Consolidated are showing a pretty large divergence. Additionally commercial traders look more positioned for treasury strength (lower yield) in the coming week(s). Beyond that though, the charts speak for themselves.

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