Another odd Monday. This one was particularly odd as there was little to no news to send stocks surging higher. The consensus finally settled on comments by St. Louis Fed President Bullard over the weekend which implied further dollar weakness. The dollar tanked against most major currencies and everything subsequently rallied. Housing news came out at 10, but the market was already up well over 1% by then. Oil traders sold the rally all day, while equity markets only marginally sold into the move. Volume was weak again, but breadth was strong. Daily Futures has all the action:
The December U.S. dollar index fell .56 to 75.17 as investors increasingly accept that the Federal Reserve is not close to raising the federal funds rate.
The National Association of Realtors (NAR) said that seasonally adjusted existing home sales were up 10.1% in October to an annual rate of 6.10 million units, much stronger than expected. From a year ago, home sales were up 23.5%. January lumber closed up $4.10 at $226.30.
The NAR also said that there were 3.57 million unsold homes, representing a 7-month supply at current sales rates. That is the lowest unsold inventory in over two years.
The U.S. Treasury Department sold $44.0 billion of two-year T-notes at a median yield of .77% with a bid-to-cover ratio of 3.16. The December U.S. T-bonds were up 1/32nd at 120.29/32nds.
The National Association for Business Economists said that they expect real U.S. GDP to be up 2.9% in 2010, up from their forecast last month of a 2.6% gain.
Grains and Cotton
January soybeans ended down 4 cents at $10.42, in spite of today’s weak U.S. dollar and strong indications of demand from China.
The USDA said that last week’s export inspections of:
Corn totaled 25.6 million bushels, down 16% from a year ago.
Soybeans totaled 73.8 million bushels, up 80% from a year ago.
Wheat totaled 15.5 million bushels, down 31% from a year ago.
December corn fell 3.75 cents to $3.872.
March cotton closed up .44 at 74.48 in spite of a bearish article in Barron’s over the weekend. Prices have risen lately with ongoing concerns that this fall’s wet weather hurt the U.S. cotton crop.
After Friday’s close, the USDA said that cattle on-feed were up 1.5% on November 1st from a year ago, roughly as expected. February cattle were up .40 at 85.82, helped by today’s higher stock market.
The USDA also said late Friday that frozen pork supplies on October 31st were down 1% from a year ago, less than expected and the first annual decline since the “swine” flu virus erupted in April. February hogs closed up 1.15 at 65.52, the highest close in five months.
Tyson Foods said that they lost $455 million in the quarter that ended on October 3rd, down from a profit of $48 million a year ago.
March coffee was up 1.65 cents at $1.3740, helped by today’s weaker dollar and the approach of the winter season in the northern hemisphere.
Gold closed up $17.90 at a new contract high of $1,164.70, continuing its push higher while U.S. interest rates remain soft. March copper finished up 2.80 cents at $3.1620.
Yesterday’s 6 to 10 day forecast from the National Weather Service is expecting below average temperatures for the eastern half of the U.S. January natural gas ended up 3.3 cents at $4.791.
According to Markit Economics, their composite index of manufacturing and services in the Euro area increased from 53.0 to 53.7 in November, the highest in two years. The December euro closed up 1.17 cents at $1.4972.
Statistics Canada said that retail sales totaled C$34.9 billion in September, up 1.0% on the month and the seventh gain in nine months.
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.
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