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ITIF report: U.S. manufacturing comeback is a ‘myth’
Dateline: Washington, DC, 1/12/2015
Article Headline: US manufacturing rebound a virtual 'myth': Study
A study by the Information Technology and Innovation Foundation (ITIF), a Washington-based think tank, dismissed the conventional account of the state of the manufacturing sector in the U.S., that the sector is healthy and improving, as a ‘myth’.
The study reports,
“American manufacturing has still not recovered to 2007 output or employment levels. [...] Moreover, the lion’s share of growth that has occurred appears to have been driven by a cyclical, rather than structural, recovery, and as such may represent only a temporary trend.”
The report contradicts analysts and free trade advocates who continue to put forth the erroneous narrative of an improving sector despite evidence to the contrary. The ITIF says recent job gains have had almost no effect on what it calls an “unprecedented” decline in manufacturing since 2000. The study says the U.S. has lost roughly 1,000,000 jobs and 15,000 manufacturing plants since that time.
The only bright spot the study notes is a growth in computers and electronics. Take away computers, and durable goods declined over 10% between 2000 and 2009. Job gains since 2009 have been barley on par with historical averages. Given the depth of the 2007-2009 collapse, any recovery story would have to be classified as weak, at best.
The report warns that policymakers and business leaders are being lulled into a false sense of complacency and that,
“[Policymakers] fear that an accurate portrayal of U.S. manufacturing will result not in a robust U.S. manufacturing strategy but in trade protectionism. [...]
To realistically assess our options, it is important to have a clear idea of where we are.”
The report is further evidence of a deflationary decline in the economy and the clear effort by mainstream economists, media and policymakers to deny the obvious.
Commodity Carnage Continues - Copper & Crude Crushed
Submitted by Tyler Durden on 01/12/2015
Despite calls for a bottom all the way down from $90, $85, $80, $75, $70, $65, $60, $55, and then $50... crude oil prices (both Brent and WTI) are now below that crucial level (and as Kyle bass notes, even very wealthy nations like Saudi Arabia and Norway are going to have to tap into their sovereign wealth funds to support their annual budgets this year or next). WTI is trading with a $46 handle once again (at fresh cycle lows), and Brent is trading once again at fresh cycle lows with a $48 handle. Just as worrying away from the apparently OPEC-over-supplied (and nothing to do with demand) oil complex, copper prices just broke below $6000/MT for the first time in 5 years (which 'over-supplier' will get the blame for that? Or is it really about demand after all, just as Saudi Prince bin Talal warned). And don't mention Iron ore, Steel, Aluminum... which all hit new cycle lows.
OPEC price war in Asia intensifies as oil falls below $50
By Florence Tan and Henning Gloystein
SINGAPORE Mon Jan 12, 2015 5:58am EST
(Reuters) - Even as Saudi Arabia and its Gulf OPEC allies appear united in their refusal to cut output to boost global oil prices, they are becoming locked in an increasingly fierce battle to secure market share in Asia.
Oil prices have slumped below $50 a barrel, the weakest since 2009, triggering a price war between producers to secure customers in Asia. And the price outlook remains grim with Goldman Sachs slashing its three-month benchmark crude forecasts to just above $40.[O/R]
The United Arab Emirates (UAE) last week joined Kuwait and Iraq in pricing crude they sell to Asia below that of OPEC's top producer Saudi Arabia.
The discounts show how Gulf members, who account for more than half of OPEC output, are prepared to take on each other to retain market share and, in so doing, put more pressure on global oil prices.
"It's a fight for the market," said Tushar Bansal of consultancy FGE, who says Gulf producers such as the UAE are prepared to stomach lower prices to hold their market share.
The UAE's Abu Dhabi National Oil Company (ADNOC) set the official selling price (OSP) for flagship grade Murban in December at a discount to similar quality Saudi's Arab Extra Light for the ninth month in a row, data from Reuters and trade sources showed last week.
This was despite Saudi Arabia raising its prices to customers in Asia after sharp reductions in previous months.
ADNOC had felt it had to reduce prices to ensure its crude remained attractive to Asian refiners, a source familiar with their strategy said.
Gold Chart
We’ve reached 1st resistance listed on the website last night 1229-1234 and the other resistance point today is 1238-1244. Odds favor one of those two points should provide the high for today and potentially this week. The only other potential target would be 1252-1272 (monthly resistance). On the support side we have 1207-1215 as support and then 1198-1203. Weekly support is the 1172-1182 area.
In the Friday update we discussed needing a close above 1222-1225 and we got 1223 on Friday. We still need a close above 1225 to further things on the upside. While we can make a case that gold is strong when compared to other commodities (as they are plunging) it is best to keep in mind that the choppy and overlapping pattern since the Nov 7th low is a warning that gold is not yet in STRONG mode on this upside move we’ve been getting. However, since the 1167 low, the price pattern does exhibit more impulsive characteristics than corrective. As long as we are above 1198-1203 in price we can label this as impulsive which would favor higher prices.
The key now is the control boyz are trying to keep gold under the December high at 1238-1239. Thus 1238-1242 should be formidable resistance. With a print high of 1231 today, we have reached the 1st target for the week (1229-1234) so it’s best to remain cautious at the moment. The short term trend remains up but any close below 1198-1203 neutralizes the situation.
 
Cycles
The next cycle turn is due Jan 19th (plus or minus 72 hours) and the odds favor it is an up cycle until then.
Silver
Silver is lagging gold and well it should with the commoditiy situation. The bottom line is whether we can get above 1675-1690. That is the point we need to conquer to retest the 1725-1735 area. A weekly close above 1738 would favor much higher towards 1850. The short term trend remains up but a close below 1600-1609 would neutralize the short term uptrend. Watch that 1675-1690 area as that is where silver must overcome resistance.
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