The market rallied back from steep morning losses as investors bought the Buffett news. The S&P finished the day higher by 0.2%. The day was a big win for the bulls as the RBA decision had markets down well over 1% this morning. I also believe investors are beginning to position for the Fed decision tomorrow. Following the rate raise by the RBA investors are becoming increasingly concerned that the Fed will sap the equity markets of their fuel. Personally, I would be shocked if the Fed were to materially alter their accommadative posture. They have been quite clear on their position to bolster markets no matter the repercussions to the dollar. That likely means we could see a dollar decline tomorrow which would surely be positive for stocks. Investors appear to be positioning themselves accordingly.
Metals – Gold Blasts Off To New Highs
The International Monetary Fund sold 200 tons of gold to the Reserve Bank of India for $6.7 billion. The IMF has long been seen as a potential seller of gold and so this transaction takes some pressure off of the gold market. December gold shot up $30.90 to a new contract high of $1,084.90. December silver closed up 74 cents at $17.18.
London copper inventories were up 1,625 tons this morning to 373,800 tons, the most since May 12th. December copper ended up 1.10 cents at $2.9560 after several manufacturing indices posted positive gains yesterday.
GM, Ford, and Nissan said that their U.S. auto sales were up in October from a year ago, but Chrysler said that their sales were lower.
The Federal Reserve begins its two-day meeting today and is expected to keep the federal funds rate unchanged at .125%. However, traders will be watching for any hints of change in the Fed’s current policy. The December 2010 eurodollars were down .02 at 98.41.
The U.S. Commerce Department said that factory orders were up .9% in September, stronger than expected. The December U.S. T-bonds fell 24/32nds to 119.02/32nds.
Grains and Cotton
Today’s U.S. Palmer Drought Map shows excessively moist conditions throughout most of the Midwest. That explains why only 25% of the corn and 51% of the soybeans have been harvested so far. December corn closed up 7.75 cents at $3.90.
The USDA will release its next crop estimates one week from today. Many are wondering if there will be some reductions due to the wet weather? November soybeans closed up 9.25 cents at $10.067.
The USDA also said that 79% of the winter wheat crop has been planted, but some of it cannot be planted yet because the summer crops have not been picked from the fields. December wheat ended down a penny at $5.157.
Archer Daniels Midland said that it earned $496 million in the quarter that ended on September 30th, down from $1 billion a year ago.
March sugar finished up .53 at 23.97 with talk that tight supplies are pushing sugar prices higher in India.
Yesterday’s 6 to 10 day forecast from the National Weather Service expects above average temperatures in the eastern half of the U.S. with above average precipitation in the central U.S. For most of the U.S., today is a beautiful fall day. December natural gas ended up 9.8 cents at $4.922.
The Reserve Bank of Australia increased its interest rate from 3.25% to 3.50%, as expected. Some are expecting rates to rise to 4.25% in the next six months. The December Australian dollar was down .05 at 89.74.
The European Commission said that they expect real GDP in the Euro zone to be up .7% in 2010 and up 1.5% in 2011. For the U.K., they expect GDP to be up .9% in 2010 and up 1.9% in 2011. The December euro closed down .0050 at $1.4701.
Source: Daily Futures
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.