Stocks started the week on sound footing and rallied about 1% as overseas markets rallied, the dollar crumbled to new 52 week lows and analysts continue to upgrade names and play catch-up with market expectations. The falling dollar boosted the rally in commodities and specifically oil which rallied to nearly $80 during the session. The market is reaching a very critical level here as energy prices are likely to become an increasing concern and the declining dollar becomes an ever increasing problem. Daily Futures wraps up the action from across all markets:
U.S. Economy
Over the weekend, Andrew Bary in Barron’s called on the Federal Reserve to raise short-term interest rates to “a more normal 2%.” In his view, rising gold and oil prices are more of a concern than high unemployment rates and a poor housing market. The December 2010 eurodollars were up .03 at 98.26.
Federal Reserve Chairman Bernanke said something today that everyone in Congress should note: “One crucial lesson from both that (1998 Asian) crisis and the recent one is that financial institutions must be carefully regulated, transparent, and sufficiently well capitalized and liquid to withstand large shocks. In part because of the reforms put in place after the crisis of the 1990s, along with improved macroeconomic policies, Asian banking systems were better positioned to handle the more recent turmoil.”
Grains and Cotton
A pattern of high pressure over the southeastern U.S. today is pointing to drier weather in the week ahead. December cotton started the day higher, but closed down 1.74 cents at 66.47.
The USDA said that last week’s export inspections of:
Corn totaled 24.6 million bushels, down 23% from a year ago.
Soybeans totaled 39.1 million bushels, down 13% from a year ago.
Wheat totaled 18.6 million bushels, down 2% from a year ago.
It has been a tough fall for the corn and soybean harvest, so far. December corn closed up 14.25 cents at $3.862 ahead of this afternoon’s USDA Crop Progress report.
Livestock
After Friday’s close, the USDA said that there were 10.474 million head of cattle on feed as of October 1st, up .6% from a year ago and a little more than expected. September placements were up 4.7% and marketings were down 3.6% from a year ago. December cattle closed up .65 at 86.45, the highest close in four weeks.
Lumber
January lumber was down $1.90 at $196.10 ahead of tomorrow’s monthly housing starts report.
Sugar
Dow Jones Newswires reported that rain in Brazil is delaying the harvest of sugarcane. The private firm, Czarnikow, said that prices will have to rise even further to ration demand in 2009-2010. March sugar finished up .26 at 24.17.
Metals
China’s National Bureau of Statistics is expected on Thursday to report on third-quarter GDP and an official today suggested that the figures will be strong. December copper jumped up 12.10 cents to $2.9665, the highest close in over a year.
Energies
Today’s 6 to 10 day forecast from the National Weather Service expects below average temperatures in the eastern half of the U.S. and above average precipitation along the East Coast. December natural gas was up 4.5 cents at $5.758.
Currencies
Japan’s Trade Ministry said that its tertiary index of services increased from 96.8 to 97.1 in August, the highest since January and stronger than expected. The December yen closed up .0021 at 1.1029.
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.