Stocks rallied 1% on the day as investors cheered the accommodative comments by Ben Bernanke. Interest rate jitters have roiled markets in recent weeks, but Bernanke was quick to emphasize his low interest rate policy in today’s comments. The uptick in stock prices came despite some very weak housing data. All in all, the bullish action was reminiscent of bullish days in the last few weeks. The volume was again very light, but breadth was strong at 2:1.
From Daily Futures:
U.S. Economy – New Home Sales Hit Record Low
The U.S. Census Bureau said that new home sales were at an annual rate of 309,000 in January, down 11.2% from December’s pace and much less than expected. In fact, it was the lowest monthly number of home sales since records began in 1963. May lumber closed down $4.50 at $267.50.
The Mortgage Bankers Association said that its index of mortgage applications was down 8.5% last week, hurt by winter storms in the eastern U.S. Rates on 30-year fixed mortgages averaged 5.03%.
The U.S. Treasury sold $42 billion of 5-year T-notes at a median yield of 2.35% with a bid-to-cover ratio of 2.75. Also, Federal Reserve Chairman Bernanke told the House of Representatives that the Fed will continue to keep the federal funds rate low “for an extended period” to help the economy. The March U.S. T-bonds were down 5/32nds at 117.23/32nds.
Grains and Cotton
May corn closed up 7.5 cents at $3.862, the highest close in five weeks, with many wondering if this winter’s snow and cold temperatures will lead to delays in planting this spring.
The USDA said in today’s Livestock Outlook that, even though the cow herd is at its lowest level since 1951, “if enough feeder cattle are pulled forward, both slaughter and beef production could be higher than previously anticipated.” April cattle were down .50 at 91.92.
The USDA said in today’s Livestock Outlook that “lower pork production, current stock levels, and expected acceleration of U.S. pork exports are together likely to sustain hog prices at above break-even levels for most producers this year.” April hogs closed up .90 at 70.35.
May sugar bounced back from yesterday’s sell-off and closed up .72 at 24.40, still facing tight supplies around the world.
The U.S. Department of Energy (DOE) said that crude oil supplies were up 3.0 million barrels last week to 337.5 million barrels, helped by increased imports. Supplies of gasoline were down 900,000 barrels and heating oil supplies were up 600,000 barrels. May crude oil closed up $1.09 at $80.38.
The DOE also said that refinery use increased from 79.8% to 81.2% of capacity last week. Over the past four weeks, gasoline demand was down .3% from a year ago while distillate demand was down 6.8% from a year ago.
China’s copper imports totaled 196,926 tons in January, up 9% from a year ago. May copper closed up 1.90 cents at $3.2535.
Statistics Canada said that corporations earned C$60.1 billion in operating profits in the fourth quarter of 2009, up 7.9% from the previous quarter, but still well below the peak of C$77.3 billion in the third quarter of 2008.
Japan’s Finance Ministry said that exports were up 41% in January from a year ago. The March yen was up .0005 at 1.1094.
Eurostat said that its index of industrial new orders in the EU-27 was up .6% in December and up 6.3% from a year ago. The March euro closed up .0003 at 1.3525.
Germany’s Federal Statistics Office said that real GDP was down 2.4% in the fourth quarter from a year ago, the worst year in the Republic’s 60-year history.
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.