The S&P 500 is at a five year high and the Dow is within 100 points of 13,661 the 52 week high. Major bank earnings were positive for Morgan Stanley and Bank of America, but not so for Citigroup. Other reports have been mixed, but not bad. I hear increasing warnings about the bond bubble and its multiple risks. There is quite a mix between economic horror stories and hopeful musing. The truth is out there in the X files.
Chinese growth improves to 7.9%, and Japanese pressure is mounting to devalue the yen. US consumers have been justifiably cautious or buying just what they need.
The grain and soybean markets are in a consolidation pattern after staging a technical rally. Chart resistance is at $7.50 on March corn, $14.50 soybeans and $8.10 wheat. Fund activity has slowed as short covering has run its course. Soybean export sales were the seasons best at 1.6 MT with about one-half to China. China’s attention is still normally directed to S American supplies which appear to be plentiful with 84 MT from Brazil and mid fifties Argentina. Rain is needed to finish Argentina’s corn crop and adverse weather has hurt their wheat. A typical January cold snap is descending out of western Canada. Watch for winter kill threats in the snow less plains. Russia is hard place tops grow things, and this year is the worst in a long time with some places near 50 below. Watch CME volume as speculators have been less enthusiastic about the Ag markets, but the drought pattern is not broken, so don’t assume.
Cattle are at their low at $130 April and short covering is looming. Cargill closed their Plainview, Texas beef plant sighting the drought, and the fact that numbers are the lowest since 1952. Boxed beef fell back $2 Thursday. The deep freeze hampers hog transportation and cattle performance, but is a short term situation. April hogs are nosing around their low like cattle. Meat demand usually picks up after the holiday selectivity has passed.
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