Another impressive day for the bulls. Despite a weak report on industrial production, record mortgage delinquencies, weak housing stocks and a lower dollar the market simply shrugged it all off and scooted higher today. There was a consistent bid under the market throughout the day. Volume was very weak on the day and breadth was very mixed. The gains were marginal for the S&P 500 at 0.1%, but we very well could have sold off sharply today. Investment managers were quick to snap up shares off their morning lows. Market bulls have to be pleased. Daily Futures has all the action:
U.S. Economy
The U.S. Labor Department said that the producer price index was up .3% in October, but down 1.9% from a year ago, a smaller monthly increase than expected. The December 2010 eurodollars ended up .015 at 98.775.
The Federal Reserve said that industrial production was up .1% in October, weaker than expected.
Foreign demand for U.S. securities is strong in spite of (or due to?) the weak dollar. The U.S. Treasury said that foreign purchases of long-term securities totaled $55.7 billion in September while U.S. purchases of foreign securities totaled $15.0 billion. The December U.S. T-bonds were up 7/32nds at 121.02/32nds.
Grains and Cotton
The corn harvest will wait while the rain continues to fall – today in Missouri, Illinois, Indiana, and Tennessee. Also, the USDA said that Mexico bought 132,619 tons of U.S. corn for this season and 77,364 tons for 2010-2011. December corn ended down a quarter-cent at $4.02.
January soybeans closed up 19.5 cents at $10.295 after the USDA said late yesterday that 89% of the soybeans have been harvested.
Livestock
Late yesterday, the U.S. Meat Export Federation said that beef exports totaled 53,001 tons in September, down 22% from a year ago. Pork exports in September totaled 120,232 tons, up 3% from a year ago. So far this year, beef exports are down 6% from a year ago and pork exports are down 15% from a year ago. February cattle started lower, but closed up .52 at 85.65.
The USDA’s Livestock Outlook admitted to uncertainty about cattle prices due to “conflicting effects from the unusually large proportions of heavy-weight feeder cattle placements in the second and third quarters of 2009, the low level of net placements during the second quarter of 2009, and follow-through effects on retail demand as a result of the economic downturn and deepening unemployment.”
Concerning hogs, the USDA said that “while somewhat stronger fall prices for hogs and wholesale pork are good news in a year where sector optimism has been all but absent, sub-$40 live hog prices still fall substantially below most producersÕ breakeven thresholds.” December hogs finished up 1.62 at 63.97.
Lumber
The National Association of Home Builders index of homebuilder sentiment stayed at 17 in November, another sign of pessimism in the industry. January lumber closed up its $10 maximum daily limit for the second consecutive day ahead of tomorrow’s housing starts report.
Metals
The U.S. dollar index traded higher today, helped by some bargain-hunting, but December gold ended up .20 at $1,139.40 anyway.
Currencies
The U.K.’s Office for National Statistics said that consumer prices were up 1.5% in October from a year ago, up from a 1.1% annual gain the previous month. The December British pound ended down .0041 at $1.6793.
Eurostat said that exports from the EU-27 were estimated to have increased 17% in September, but were still down 19% from a year ago. The December euro closed down 1.30 cents at $1.4853 after ECB President Trichet again made it known that he would like to see a stronger U.S. dollar.
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.