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MARKET WRAP – THE SANTA CLAUS RALLY CONTINUES

Day three of the slow trading week is in the books and it was another slow, low volume melt-up.  As we mentioned earlier, sellers have left the building and all that’s left is those bullish portfolio managers looking forward to 2010. The action this week has lacked conviction and can basically be written off as meaningless.  This week’s action perfectly caps the feeling of the entire year – surreal.   Daily Futures has all the action from today’s markets:

U.S. Economy
The U.S. Census Bureau said that new home sales were at an annual rate of 355,000 units in November, down 11.3% from October’s pace and much less than expected. With one month to go, 2009 new home sales are down 24% from a year ago. March lumber ended up .20 at $238.30.

The University of Michigan’s consumer sentiment index improved from 67.4 to 72.5 in December, weaker than expected. The March 2011 eurodollars are steady.

The U.S. Commerce Department said that personal incomes were up .4% and consumer spending was up .5% in November.

The U.S. Treasury will sell a record $118 billion of T-notes next week.

Grains and Cotton
The USDA said that Italy bought 114,000 tons of U.S. soybeans and China bought 110,000 tons of U.S. soybeans for 2009-2010. Also, 78,000 tons of U.S. soybeans were sold to unknown destinations for this year and 65,000 tons were sold for 2009-2010. March soybeans closed up 10.5 cents at $10.09.

Livestock
USAgnet reported that Russia reduced its U.S. import quota for pork from 100,000 to 57,500 tons in 2010. The quota for U.S. poultry imports will be reduced from 750,000 to 600,000 tons.

After yesterday’s close, the USDA said that frozen pork in storage totaled 487 million pounds, down 7% from a year ago and less than expected. February hogs closed up .92 at 65.67.

February cattle closed up .70 at 85.37 while the second major winter storm of the season crosses the U.S. central plains.

Orange juice
March orange juice was down .0070 at $1.3565 while the ten-day forecast for central Florida remains safely warm.

Energies
The U.S. Department of Energy (DOE) said that crude oil supplies were down 4.9 million barrels last week to 327.5 million barrels due to low imports. Supplies of gasoline were down 900,000 barrels and heating oil supplies were down 2.0 million barrels. February crude oil closed up $2.27 at $76.67.

The DOE also said that refinery use stayed at 80.0% of capacity last week. Over the past four weeks, gasoline demand was up .8% from a year ago while distillate demand was down 3.9% from a year ago.

Metals
February gold finished up $7.30 at $1,094.00 as today’s weak new home sales report and yesterday’s soft GDP report make it more likely that the Fed will continue to keep the federal funds rate near zero.

Currencies
Statistics Canada said that real GDP was up .2% in October, but down 3.2% from a year ago, not as strong as expected. The March Canadian dollar is trading higher.

The U.K.’s Office for National Statistics said that its index of services was down 3.7% in October from a year ago.

Statistics New Zealand said that real GDP was up .2% in the third quarter, but down 1.3% from a year ago.

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