As I mentioned last year, commodity prices are merely the medium by which capital is transferred from users, to producers. Whether it's Oil, Copper, Iron Ore, Nickel, or Soybeans, the commodity boom if anything means a tidal wave of capital flooding into Russia, Brazil, Chile, Australia, and every country in the M.E. producing Oil. But what if you cannot recycle those dollars into the very things dollars buy--US assets? What if you cannot buy US companies, or US infrastructure, or US real estate, because congress says you can't--which is a reflection of the public mood? Well, you can buy US treasuries. Or, you can turn elsewhere. But wait. Europe companies aren't for sale either. Just try and buy a French water utility, or a Spanish electical utility. Just try! So this brings us back to the highly liquid US treasury market (which is falling in price every day right now) or, Gold. Which will you choose, if you're sitting on a Dollar Mountain? Now, I don't like Gold. And if Gold is going to do well, then, that means we're living in a world that's not so great to be living in. And guess what? As I look around, with sectarian violence exploding into every corner of the world, and the American Empire of Debt showing signs of creak-creak-squeak, suddenly you realize we are already living in Gold's World. The only thing left to happen now, is for Gold to run back--at minimum--to it's old nominal high, above 800.00. Then we can check back in with the world, and see if it wants to improve itself, or, keep going in its presently dark direction.

DAX +0.65%; EURUSD 1.1921 (+/-0%); RTS is up; German 10-year 3.69 (+/-0), longer euribors up.

Finnish crap company Proha sold Artemis to Trilogy, Inc. Proha is up almost 20%, thus the price was good. (Yes, the product is not crap.)

IPO of another crap company, Salcomp (Nokia subcontractor), seems to have failed as expected. Now down -2.5%

Traders are sleepy, somewhat interested in Nokia longs. They mostly ignore DAX and complety Nasdaq. Play with UPM Kymmene and financials continues.

-- Let your prophets run and sell the suckers!

I didn't notice any evidence on AI.

-- Let your prophets run and sell the suckers!

So ladies, you’ve found out that Flambeee is a gold bug, and you want to know what that means. Well, here’s the story. It means that Flambeee spends his evenings lying before the fireplace with piles of gold coins by him. As he lovingly caresses them, he thrills at listening to the bright clinging sound as the gold coins fall to the ground after having fondly tossed them into the air. He is mesmerized by the flames from the fireplace as they reflect from the shiny gold surface of his gold coins. So, ladies, you need a battle plan, and here it is:

First, be sure to take with you a copy of Alan Greenspan’s 1966 article, “Gold as Economic Freedom.”:

http://www.financialsense.com/metals/greenspan1966.html

Flambeee will be delighted to let you know that he keeps a worn copy of the same article in his back pocket at all times. And be sure not to ask Flambeee if gold is just a commodity, or what does he think about other metals such as copper, nickel or steel. Gold bugs don’t like being asked questions like this. And even if you asked, a gold bug like Flambeee would only respond with a glassy-eyed look, the same look cows give you as they graze on grassy fields.

And by all means, don't show him today’s Morningstar article on gold!:

http://news.morningstar.com/article/article.asp?id=158735&pgid=wwhome1a

So, good luck, ladies!

Now for other market news:

From the Fianancial Times:

By Peter Garnham and Pan Kwan Yuk

Published: March 13 2006 13:38 | Last updated: March 13 2006 21:19

Shares on Wall Street advanced on Monday amid a fresh wave of merger and acquisition activity.

With no major economic data or corporate earnings news on the calendar, a number of bid approaches combined to boost investors’ sentiment.

The S&P 500 closed 0.2 per cent higher at 1,284.13 while the Nasdaq Composite Index gained 0.2 per cent to 2,267.03. However, the narrower Dow Jones Industrial Average was unchanged at 11,076.02.

Shares in North Fork Bancorp rose 15 per cent to $29.20 after credit card issuer Capital One Financial said it had agreed to buy the company in a $14.6bn cash and stock deal.

Calyon Securities maintained its “add” rating on Capital One, saying that while the deal came as a surprise, it was a good acquisition at a reasonable price. “We also think it does a lot to further the company’s transformation into a traditional banking business,” said Sanjay Sakhrani, an analyst at Calyon.

Shares in Capital One fell 7.6 per cent to $83.10.

Elsewhere, newspaper publisher McClatchy slipped 2.9 per cent to $51.55 after saying it would acquire Knight Ridder, its larger rival, in a cash and stock deal worth $4.5bn. Knight Ridder eased 1.7 per cent lower to $63.92.

Analysts at Merrill Lynch noted McClatchy shares had moved up on Friday as it became clear the company was the frontrunner to acquire Knight Ridder. “This leads us to believe that some of the more risk adverse money had already bolted the shares,” they said. “We believe the deal would be attractive financially to McClatchy.”

The telecommunications sector was also in focus on reports that Verizon had made an initial approach to Vodafone for its 45 per cent stake in the companies’ Verizon Wireless joint venture.

Verizon rose 0.4 per cent to $34.32, while Vodafone put on 4.8 per cent to $22.56.

Shares in the Nasdaq Stock Market eased 0.6 per cent to $43.30 after jumping more than 10 per cent on Friday following its $4.2bn bid for the London Stock Exchange. The bid was rejected as too low, but few people were predicting the end of the affair, with the NYSE Group, which owns the New York Stock Exchange, up 9.3 per cent to $81.49, predicted to enter the fray.

Watson Pharmaceuticals slipped 1.9 per cent to $29.00 after saying it had agreed to buy Andrx in a $1.9bn deal designed to bolster its generic drugs business. Shares in Andrx climbed 9.9 per cent to $23.73.

Away from M&A, Apple Computer rose 3.9 per cent to $65.68 as Citigroup upgraded shares in the maker of the iconic iPod music player from “hold” to “buy”.

The broker said that while product transitions had conspired against the company during the current quarter, it expected new products to fuel growth in April. “Apple remains one of the best ways to play the digitisation of music, photos and video,” analysts said.

Elsewhere in the technology sector however, chipmaker Advanced Micro Devices fell 7.2 per cent to $34.00 after broker ThinkEquity Partners downgraded the stock from “buy” to “sell”. Analysts said the change was triggered by talk that Intel, the world’s largest chipmaker, was beginning to slash prices.

http://news.ft.com/cms/s/0488bc26-b293-11da-ab3e-0000779e2340.html

From the Financial Times:

By David Turner in Tokyo, Joanna Chung in London and Richard Beales in New York

Published: March 13 2006 12:59 | Last updated: March 13 2006 20:57

Government bond prices around the globe were weaker on Monday amid interest rate jitters in Japan, Europe and the US.

A growing view that the Bank of Japan’s new policy framework is distinctly hawkish sent Japanese government bond prices sharply lower and pushed yields on two-year and five-year JGBs to five-year highs.

Last week, the BoJ announced an end to its ultra-loose monetary policy and moved to a regime of managing interest rates. On Monday, Atsushi Mizuno, a member of the central bank’s board, came close to calling for a rise in interest rates soon.

Mr Mizuno said: “If there are excessive expectations for zero interest rates to continue long-term, then the stimulus on demand will be too strong.” He also warned that at some point “fluctuations in the economy could become big and that in turn could make official rate movements that much bigger”.

Although Mr Mizuno is widely known as a hawk, his comments came at a sensitive time in the bond market when bond bulls were looking for reassurance.

By the end of trading, the yield on the five-year JGB had risen to 1.180 per cent, up 7bp on Friday’s close and 14.5bp higher than Thursday’s finish. The yield on the two-year rose 4.5bp to 0.515 per cent. The 10-year ended up 3.5bp at 1.690 per cent, the highest since August 2004.

Anticipation of higher interest rates in the eurozone and the US also dented sentiment. Eurozone government bond prices felt further pressure from the more than €20bn of new supply expected this week.

In late trading, the yield on the two-year Schatz rose 7.4bp to 3.257 per cent and the 10-year Bund yield added 4.2bp to 3.709 per cent.

US Treasury prices fell, pushing yields towards last week’s highs. There was talk of “curve steepening” trades as two- and 10-year yields extended their gap.

By late trade, yields on two-year notes were off 1.3bp at 4.729 per cent and 10-year yields were up 0.4bp at 4.773 per cent.

Participants were also readying for a busy schedule for the rest of the week, including retail sales figures on Tuesday.

Hopes of a near-term interest rate cut in the UK diminished and gilt prices fell after stronger than expected producer prices and house price figures. The yield on the two-year gilt was up 4.2bp to 4.456 per cent while the 10-year gilt yield added 0.5bp to 4.357 per cent.

http://news.ft.com/cms/s/63ae914e-b28e-11da-ab3e-0000779e2340.html

From the Financial Times:

By Jennifer Hughes in New York and Darryl Thomson in London

Published: March 13 2006 10:26 | Last updated: March 13 2006 18:03

Early moves subsided into range-bound trading for the major currencies on Monday as investors waited for the week’s calendar of US data to kickstart activity.

Market chatter still centred on the likely scale and speed of the unwinding of carry trades after last week’s market wobbles and the Bank of Japan’s formal ending of quantitative easing, a precursor to eventual rate rises.

By midsession in New York, the euro was at $1.193 against the dollar from a week-high of $1.197 in Asian trading.

Carry trades, where investors borrow in low-yielding currencies such as the yen and invest the proceeds in higher-yielding, but riskier, assets, have been a big feature of the low interest rate environment, but with the US, the eurozone and Japan all tightening monetary policy concurrently, the fear is of a big rush to unwinding the trades.

In the absence of new carry trade woes, attention focused on interest rates and the likely scale of further rises, particularly in the US.

Today, fourth-quarter US current account deficit data are expected to show a quarterly gap of about $200bn but the real market mover will be February retail sales numbers.

”At the moment, the structural backdrop isn’t a market driver, its all about the cyclical side of the equation, particularly interest rates and rate expectations,” said Ryan Shea at State Street.

Retail sales are expected to drop from January’s outsized gain, not least because of colder weather - a factor that could cloud market reaction to the numbers.

“When you’ve got such strong weather-related issues going on, it is difficult to get a sense of the underlying trend,” added Mr Shea.

There was an upbeat tone from a meeting of G10 central bankers at the Bank for International Settlements, who said that markets have so far coped well with the shift to higher interest rates.

“We are in a different universe now,” Jean-Claude Trichet, the chairman of the G10 central bankers and the European Central Bank said. “Central banks... are doing what they do to keep delivering price stability over time, being credible.”

The yen fell to month-lows against the euro and the dollar at Y142.24 and Y119.20 respectively. Some traders said the raft of US data this week weighed on the Japanese currency amid speculation that the Federal Reserve could tighten policy beyond the 5 per cent Fed funds rate that is currently priced in, should the data be strong.

Paul Chertkow at Bank of Tokyo Mitsubishi UFJ reckons the BoJ will be extremely cautious in its own tightening and that the yen should weaken further.

“Our six-month dollar-yen forecast is Y124.00,” he said.

Sterling was weaker, particularly against the euro where it hit a seven month high of £0.6928 before easing to £0.6901.

”There’s been this massively positive sterling M&A story and yet sterling hasn’t gone up, so a bit of a squeeze started on Friday,” said Paul Bednarczyk, strategist at 4Cast consultancy, who noted that some technical analysts have been talking about a target of £0.80 for the euro.

There was an early gain for the euro on news that the central bank of the United Arab Emirates was looking to switch 10 per cent of its estimated $23bn in reserves from dollars into euros. Last July the bank said it was looking to convert 5 per cent.

But in spot market terms, the amount is still small.

”The day they do the deal, then its a market mover, but for now, 10 per cent is only $2.3bn,” noted Mr Bednarczyk, who pointed out that central banks only usually announce reserve shifts after they have been made to avoid widening prices.

“If they’re really doing this, I wouldn’t be surprised if they’ve already done a fair chunk before talking about it,” he added.

http://news.ft.com/cms/s/d7b2e5ae-b275-11da-ab3e-0000779e2340.html

From the Financial Times:

By Kevin Morrison

Published: March 13 2006 11:33 | Last updated: March 13 2006 21:56

UK gas prices tripled on Monday as the unexpected cold snap increased gas demand at a time when the country’s largest gas storage unit is out of action until May, leaving accessible gas in storage near critically low levels.

Traders said gas within-day prices rose to a record 255p per therm compared with the previous closing price of 75p. Gas traded at 220p in late London business. Gas prices for day-ahead, the week-ahead and next winter were also sharply higher.

Adrian Callinan, director of EU power and gas at Deutsche Bank, said gas prices were responding to the cold weather, the relatively low levels of gas in storage following the closure of the Rough storage facility until May, and the lack of gas imports from Europe via the Interconnector pipeline due to cold weather on the continent.

“With Rough [storage facility] out of action until May, we are down to about 10 days of gas consumption left in storage, after then we will be reliant on LNG [liquified natural gas] imports and gas through the Interconnector,” said Mr Callinan.

He said the cold weather was forecast to remain for the rest of the week, but was predicted to turn milder next week.

The high prices might force some industrial users to switch off their gas supplies because the higher price has raised operating costs to uneconomic levels.

The rise in UK gas prices has also pushed electricity prices higher, because 40 per cent of the UK’s power generation is fuelled by gas.

Oil prices jumped sharply as colder weather forecasts in Europe and the US were supportive for energy prices.

IPE Brent for April delivery leapt $1.37 to $62.20 a barrel by the close of trade in London.

April West Texas Intermediate soared $1.81 to settle at $61.77 a barrel on the New York Mercantile Exchange.

Futures prices for refined petroleum products were higher. April unleaded gasoline futures on Nymex were 5.52 cents cents higher at $1.7433 a gallon, and April Nymex heating oil futures were 5.32 cents up at $1.7378 a gallon.

Traders said the market was becoming more concerned about refined products in the US due to the extended refinery maintenance programme and the upcoming changes in specifications that will lead to tighter emission standards.

However, US petrol stockpiles and the country’s crude oil inventories are at their highest levels in about six years.

Gold bounced off a two-month low reached on Friday, rising more than $5 to $545.70/$546.40 a troy ounce. Base metal prices were also firmer. The three-month copper price was $75 higher at $4,900 a tonne on the London Metal Exchange.

http://news.ft.com/cms/s/b184da96-b283-11da-ab3e-0000779e2340.html

Says may switch up to 10% of $22.5 billion reserves
By Steve Goldstein, MarketWatch
Last Update: 10:23 AM ET Mar 13, 2006

LONDON (MarketWatch) -- The central bank governor of the United Arab Emirates suggested the country may switch up to 10% of its $22.5 billion in currency reserves into euros, in a sign of fallout from Congress' hostility to the acquisition of some U.S. ports by a Dubai-based firm.

The comments from UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi didn't have a huge impact on the euro, which rose about 0.2% at $1.1925.

Though Al Suwaidi didn't link the forex move to Dubai Ports World's acquisition of Peninsular & Oriental Steam Navigation, the market interpreted the comments in that way.

"The talk has clarified just how damaging the rejection of Dubai Ports proposed takeover of U.S. ports from P&O could be. The failed Dubai Ports deal has further damaged the reputation of President Bush with his approval rate falling to historic levels," said currency analysts from BNP Paribas.

On Friday, trade talks between the U.S. and the UAE were postponed.

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B2986D561%2D727A%2D4C8D%2DA088%2D6857CFFABDB1%7D&siteid=google

Pakistan weekly spills 9/11 beans
OUR SPECIAL CORRESPONDENT

New Delhi, March 12: The Pakistan foreign office had paid tens of thousands of dollars to lobbyists in the US to get anti-Pakistan references dropped from the 9/11 inquiry commission report, The Friday Times has claimed.

The Pakistani weekly said its story is based on disclosures made by foreign service officials to the Public Accounts Committee at a secret meeting in Islamabad on Tuesday.

It claimed that some of the commission members were also bribed to prevent them from including damaging information about Pakistan.

The magazine said the PAC grilled officials in the presence of foreign secretary Riaz Mohammad Khan and special secretary Sher Afghan on the money paid to lobbyists.

[snip]

The Pakistan foreign office defended the decision to hire the lobbyists, saying it was an established practice in the US.

An observer at the Islamabad meeting said money could play an important role in buying powerful people. The remark came in response to comments made by some US officials after 9/11 that “Pakistanis will sell their mothers for a dollar”.

Pakistan had emerged as front-runner in the fight against terrorism unleashed by the US after the terror strikes. Washington pumped in billions of dollars to win President Pervez Musharraf’s support in launching a crackdown on al Qaida network thriving on the Pakistan-Afghanistan border.

http://www.telegraphindia.com/1060313/asp/nation/story_5962372.asp