Investors pared back risk today on the back of weak industrial production figures out of Germany and disappointing earnings. Investors shrugged off the good news from FedEx and sent the S&P 500 down 1% to settle below 1,100. For now, the market bounce off the 50% retracement level last Friday, is looking like the line in the sand. Daily Futures has the action from all markets:
U.S. Economy
FedEx said that it will have better-than-expected earnings for the quarter that ended in November, a sign of improving conditions around the world.
The March 2011 eurodollars were up .095 at 98.47 after Fed Chairman Bernanke tried to reassure markets yesterday that in spite of Friday’s positive employment report, the Fed was not yet close to increasing the federal funds rate.
The U.S. Treasury sold $40 billion of 3-year T-notes at a median yield of 1.17% with a bid-to-cover ratio of 2.98.
Grains and Cotton
Dow Jones Newswires cited estimates that peg Brazil’s 2009-2010 corn crop at 50 million tons and the soybean crop at 64.5 million tons. That is a little less corn and a little more soybeans than the USDA estimated in November. The USDA’s next estimates will be released on Thursday morning. January soybeans were down 9 cents at $10.44.
Australia’s Bureau of Agricultural and Resource Economics reduced its estimate of its 2009-2010 wheat crop from 22.7 to 22.0 million tons. March wheat closed down 8.25 cents at $5.397.
Livestock
February cattle ended down .17 at 83.12 while much of the U.S. is getting hit with its first major winter storm of the season.
Lumber
Housing starts in Canada were at an annual rate of 158,500 units in November, up .7% on the month, better than expected, and the most this year. March lumber ended down .50 at $236.00.
Orange juice
In spite of the severe winter conditions for most of the U.S., the ten day forecast for central Florida remains safely warm. January orange juice was down 1.25 cents at $1.2525.
Energies
Arctic cold temperatures in the northwestern U.S. are making their way eastward with blizzard conditions in the Central Plains headed toward the Great Lakes. January natural gas gained 14.3 cents to $5.114, the best close in a week.
The U.S. Department of Energy’s (DOE) Short-term Energy Outlook predicted that West Texas Intermediate crude oil will average about $76 per barrel this winter and then rise to $82 by December of 2010. January crude oil closed down $1.31 at $72.62.
The DOE also said that they expect the spot price of Henry Hub natural gas to average $4.62 per thousand cubic feet in 2010.
Metals
China reported 1.34 million vehicle sales in November, up 96% on the month. March copper fell 4.40 cents to $3.165.
The weak-dollar/strong-gold trade continued to unravel today. February gold fell $20.60 to $1,143.40, the lowest close in two weeks.
Currencies
The Bank of Canada met and kept the interest rate unchanged at .25%, as expected. The Bank said that the recovery appears to be “solidly entrenched”, but it will continue to keep the interest rate low, at least through June of 2010. The March Canadian dollar closed down 1.25 cents at 93.71.
The U.K.’s Office for National Statistics said that industrial output was unchanged in October and down 8.4% from a year ago. The March British pound fell 1.80 cents to $1.6249, the lowest close in seven weeks.
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.