GENERAL MARKET CONDITIONS

The investor is no idiot. Even if central banks hide or manipulate all the statistical information he will not get swayed or carried away by the same. This is the message given by the investors to the central banks after the fall in global stock markets despite coordinated interest rate cuts by all the central banks.

The Dow Jones closed below 9000 on signs that carmakers will be the next victims of the credit crisis. Coordinated interest-rate reductions by major central banks on October 8 failed to revive lending among banks. The 3 month London interbank offered rate (Libor), rose to 4.75% yesterday, the highest level since December 28. It's an absolute panic in stocks. Bad assets need to be taken off balance sheets, new capital needs to be added and then we might, maybe, get a respite.

Yamato Life Insurance Co., a Japanese insurer, filed for court protection from creditors in the nation's first bankruptcy in the industry in seven years, with debt exceeding assets by 11.5 billion yen ($116 million). US credit woes now are spreading to Japan. I hope the spread will be limited to developed nations. If US credit woes spread across emerging markets then there will be a total break down in the global financial system.

If interest rates and other measures taken by various central banks fail then currency devaluation could be the next step. Currency devaluation will happen if and only if the measures fail. This is just one of the measures which I am not ignoring and will not happen in 2009. If central bank measures fail by 2009 then there is a realistic chance of currency devaluation in 2010.

Markets will be looking forward to the G7 meeting over the weekend for comments and further actions.

COMEX COPPER DECEMBER

$200 should provide some support. Highly oversold conditions exist. A close below $244 today and next Friday will result in $170 and $140. Resistance starts at $244 and $280.


MCXARUN
9994500540