"When the going gets tough, the tough go shopping..." The irony of the adage frequently applied to debt-laden US consumer that in part got the US into its present credit funk was on display in Thursday's US equity market rally.
Bargain-hunters socked the bears with yet another short squeeze bear market rally on virtually no macroeconomic trigger, sending US indices up by over 6.5% across the board in spite of yet another dismal weekly jobless claims data in the US and confirmation of a recession in Germany just hours earlier. In turn, bourses in Asia bounced in concert with US markets, putting an end to persistent losses seen over the course of the entire week.

Nikkei gains were maxed out just over 5% amid sharp rallies in auto and consumer export heavy names, with Isuzu gaining over 4% and Konica picking up as much as 14% in mid-Asian session. With front-month S&P futures sliding on profit-taking however, the steam was also coming off from Tokyo trading as Nikkei pared its gains toward 3% session gain. Shares of video game console maker Nintendo were particularly strong, gaining over 5% while basking in a surprisingly strong WII sales report that saw an increase of 55% on a yearly basis helping to account for an 18% gain in overall US sales. S Korea's Kospi and Taiwan's Taiex - economies with greater exposure to tech/electronics-heavy names - were notably less enthused on a relative basis in light of the horrific guidance downgrade from Intel and AMAT earlier this week. Kospi index was last seen gaining just over 1% while the Taiex traded nearly flat by mid-session.

Australia's S&P/ASX index widely tracked gains in commodity markets, picking up just over 2% albeit trading well off session highs. Mining giants BHP and Rio peaked with gains as high as 6% and 7% respectively prior to modest profit taking while oil producer Woodside Petroleum bounced over 5% amid the sharp rally in crude from just below $55 toward the $60 handle.

Speakers: A session light in fresh economic data was mitigated by heavy dose of rhetoric from notable speakers worldwide. Minnesota Fed Governor Stern looked to ease market worries of overseas institutional investors abandoning their generous infusion into US financial assets, particularly as key Asian economies look to stabilize their own domestic turmoil via expensive stimulus plans. Additionally, he has voiced his opposition to a trend of over-regulation and excessive bailouts that appear to be increasingly prevalent as the financial crisis evolves. US Treasury's Paulson, who was scapegoated with a market selloff the prior session attempted to clarify his position of extending TARP funds to consumer asset-backed debt, further acknowledged that $700B allocated would not be enough to buy illiquid toxic assets on the books and could be put to better use in other sectors. Notably, he also "ping-pong"-ed the pleas of sinking auto companies, stating that he saw other paths for them to secure funds and urged Congress to address their concerns just as Congressional leaders appear to be increasingly reluctant to give carmaker industry a pass.

With the G-20 conference set to kick off in Washington on Friday, a number of attendees issued statements previewing their respective agendas. UK Prime Minister Gordon Brown called for collaborative global tax cuts to address the financial crisis. Japan's PM Aso, struggling to restore his political relevance at home was seen looking for a leadership role at the G20, issueing a bold promise of $100B loan to IMF from Japan while also recommending that IMF double its loan-ready capital to $640B. Mexico's President Calderon appeared to be slightly more pragmatic, stating that expectations of notable impact from G20 should be low while looking forward to an opportunity to establish closer ties with regional partners Brazil and Argentina.

Rhetoric from China's Central Banker Yi and NDRC planners echoed statements from Fed's Stern, easing market concerns of China using its extensive FX reserves to pay China's RMB 4 trillion stimulus saying that the funds will be "all new money". Meanwhile, inflationary concerns over speeding up the printing press to pay for the fiscal stimulus were mitigated by central bank's view that risk of inflation in China has been "resolved" and the new policy was aimed at preventing deflation. After underperforming on GDP in the most recent reported period, China's view of its economy has been particularly sour as evidenced by a government economist forecasting growth to be below 9% in Q4 and below 8% in 2009, allowing the central bank to sound off dovish and signal additional rate cuts in months to come.

In currencies, heavily bid US dollar and Japanese yen put in a near-term top on risk aversion outflow. EUR/USD bounced sharply higher in mid-US hours above 1.28 and has since consolidated those gains with a correction to just above 1.27 levels. USD/CHF finally broke through the 1.19 ceiling en route to 1.20, but has since retracted those gains as well. GBP/USD bounce accounted for nearly 4 big figures before bouncing back below 1.48 in Asian hours.
European currencies trading against the yen saw their gains inflation by JPY declines with EUR/JPY rallying as much as 800pips from 117.60 lows and GBP/JPY bouncing off the late-October low just under 139 for a potential double-bottom. Technical considerations in commodity driven AUD/USD are even more pressing in light of the apparent inverse head and shoulders formation off the multi-month low at psychologically-relevant 0.60. A second consecutive confirmed RBA intervention in support of AUD may also bode well for the Aussie currency in the near term.

Crude oil opened the Asian session sharply higher and traded to as high as $59.98/bbl. However, crude has since pulled back and is now ( only higher by (%) as most Asian equities have moved off of the session's best levels. During the US session, the IEA as expected lowered its 2008 and 2009 oil demand forecast due to the weaker global economy. The IEA also cut its Chinese oil demand estimate for 2009. The declining demand trend in China was confirmed by reports that China's largest oil refiner Sinopec would lower its November output by 10%. Prior reports had already noted that Sinopec and PetroChina were cutting prices for gasoline and diesel at some of their filling stations.
As demand worries continue to drive oil prices lower, OPECs' President confirmed that the cartel would hold a consultative meeting in Cairo on Nov 29, increasing expectations that the cartel will implement another output cut.
During today's US session, the weekly Department of Energy inventories report showed that crude inventories and refinery utilization rates were lower than expected last week, while gasoline stocks were higher than expected (DOE CRUDE: +22K V 500KE; GASOLINE: +1.9M V +500KE;UTILIZATION: 84.6% V 85.5%). In other news Goldman Sachs lowered its 2008 and 2009 oil price forecast and noted that oil prices could fall to $50/bbl. Spot Gold is higher by more than 3% and gaining despite the weaker Euro. Gold possibly received support from an unconfirmed HK press report noting that China could seek to diversify its fx reserves by increasing its holdings of bullion. According to the report, China currently holds around 600 tons of gold and could increase this amount to as much as 4,000 tons. Following this report the Chinese Central Bank noted that the country is being responsible in its fx reserve investment.