MARKET WRAP – MARKETS CONTINUE TO MOVE HIGHER

Stocks traded higher on the day by 0.7% as the Dubai news gave investors incentive to take on a bit more risk.  The dollar declined against the Yen and Euro as the carry trade continues to work in favor of the reflation trade.   Volume was very light on the day, however, breadth was strongly in favor of bulls at 3:1.  The VIX closed down about 2% at 21.  Crude oil fell for the 9th straight day and finished below $70.  All in all, there continue to be very few catalysts that could send stocks sharply lower in the coming weeks.  The sideways to up market should continue into year-end.  Daily Futures has all the action:

U.S. Economy
White House advisor Lawrence Summers said that he expects the economy to start adding new jobs in the spring of 2010. Is that too optimistic? The March 2011 eurodollars were down .055 at 98.355 ahead of tomorrow’s final Federal Reserve meeting of 2009.

Citigroup has reached an agreement to repay the U.S. government $20 billion of the $45 billion that it borrowed last year from TARP. The government also holds $25 billion of Citigroup stock that it is expected to sell in the next twelve months.

Standard and Poor’s announced that MBIA, Ciena Corp., Dynegy, KB Home, and Convergys Corp. will all be dropped from the S&P 500 index on December 18th. In their place, will be added Mead Johnson, Ross Stores, VISA, Cliffs Natural Resources, and SAIC Inc.

Grains and Cotton – Soybean Exports Stay High
The USDA said that last week’s export inspections of:
Corn totaled 28.1 million bushels, down 10% from a year ago.
Soybeans totaled 53.6 million bushels, up 52% from a year ago.
Wheat totaled 13.0 million bushels, up 3% from a year ago.
March soybeans closed up 18.75 cents at $10.617.

The National Oilseed Processors Association said that 160.3 million bushels of soybeans were crushed in November, a record high for the month. March soybean meal closed up $8.70 at $312.60, the highest close in four months.

The USDA said that 116,000 tons of U.S. corn were sold to unknown destinations. March corn was up 4 cents at $4.085.

Livestock
February cattle were up .67 at 83.95 and February hogs were up .45 at 65.87, both boosted by bitter cold temperatures in the northern U.S. plains.

Coffee
March coffee closed up 3.25 cents at $1.4590, supported by increasing talk of leaner world supplies. On Friday afternoon, the USDA will release its semi-annual estimates for the coffee market.

Sugar
March sugar closed up 1.28 cents at 25.28, the highest close in ten weeks with ongoing support from tight world supplies.

Orange juice
Yesterday’s 6 to 10 day forecast from the National Weather Service is expecting below average temperatures for the southeastern U.S., but the ten day forecast for central Florida remains safely above freezing. January orange juice jumped up 6.05 cents to a new contract high at $1.3290.

Energies
February natural gas closed up 17 cents at $5.402, helped that last Thursday’s inventory report showed the first drawdown of the season. Also, bitter cold temperatures are hanging over the north-central U.S.

Currencies
Eurostat said that industrial production in the EU-27 was down .7% in October and down 10.2% from a year ago. Also, the number of people employed in the EU-27 was down .5% in the third quarter and down 2.0% from a year ago. The March euro ended up .0029 at $1.4643.

The March British pound was up .0063 at $1.6294 after news that Abu Dhabi will extend $10 billion of financing to Dubai.

Statistics Canada said that household net worth was up 2.3% in the third quarter to $5.7 trillion. Also, industries were operating at 67.5% of the capacity in the third quarter, down slightly from 67.7% in the second quarter.