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FinNews for December 21, 2012 Top Stories The U.S. current-account trade deficit for the third quarter shrank by 9 percent to $107.5 billion, bringing its smallest trade gap since the final quarter of 2010. (1) The recent progress in closing the gap "reflected a decline in the deficit on goods and a small increase in the surplus on services, led by a gain in foreign earnings made by U.S. companies providing financial services, insurance and professional services." (2) The amount of claims for first-time unemployment insurance payments rose by 17,000 to 361,000, which is not too far off from the 360,000 figured projected by economists. (3) The House of Representatives voting on "Plan B" has been put off. (4) The fiscal cliff remains in the forefront of US economic debates as tax rates for the upcoming fiscal year still have not been decided upon and Bush-era breaks are set to expire on January 1. (5) Economic Releases & Statistics Housing starts for November fell by 3 percent to 861,000 due to the recorded setting pace that was brought about last month as the Northeast began to recover from super-storm Sandy. Nevertheless, although "housing starts are far above the annual rate of 478,000…they are still well short of the 1.5 million annual rate that is considered healthy." (6) Conversely, building permits reached its highest point since July 2008, rising 3.6 percent to a seasonally adjusted annual rate of 899,000 units. Economists' forecasts were far below this at an 875,000-unit pace. (7) The gross domestic product growth "was revised up from its previous estimate of a 2.7 percent annual growth rate" to 3.1 percent. Making the finally calculation come in at more than double the 1.5 percent annual growth rate predicted by analysts. (8) The Commerce Department's monthly report on personal income and spending should increases on both accounts. Personal income was up by 0.6 percent and spending was up by 0.4 percent. The U.S. populace also saved more, with the savings rate rising by 3.6 percent for November. (9) Stocks & Earnings KB Home's fourth quarter revenue rose by 20 percent to $578.2 million. However, the company's plan to increase the purchase price of their built-to-order homes caused their shares to drop by 6.4 percent to $15.59. (10) Apple stocks have risen 2.9% to $533.90 even though speculations are prevalent that the iPhone and iPad have flooded the market. There is a consummate demand for new and improved computer based gadgets that analysts feel Apple is not developing fast enough to outpace Samsung and Google, their most capable rivals. (11) Office Max has capitalized on a terrible market by offering a 2 cent/share quarterly dividend and by providing a lucrative spread sheet. A 30 percent ownership of Boise Cascade has solidified these returns by offering a solid backing to its investment. (12) The New York Stock Exchange announced Thursday that it plans to sell to the Intercontinental Exchange for $8.2 billion. The takeover will give ICE control of NYSE Liffe, which made NYSE "an operating income of $473 million…in 2011 on revenues of $861 million compared to an income of $533 million on revenues of $1.3 billion from its equities business." (13) Global Currencies The euro advanced 0.1 percent to $1.3245, reaching an eight-month high over the dollar. This recent increase was brought about after a German report presented a larger than expected demand for assets in the region, in addition to a strengthening business confidence. (14) After Bank of Japan announced plans to stimulate their economy through monetary stimulus "the yen traded at an almost 20-month low against the dollar" and fell against all of its 16 major counterparts. (15) Canadian currency, commonly known as the loonie, advanced 0.1 percent to 98.77 cents against the U.S. dollar as economic forecast "data from both countries boosted the appeal of higher-yielding assets." (16) Oil & Energies Wednesday's release of energy stats by the Energy Information Administration (EIA) showed a decrease in crude oil supplies last week of 0.3 percent, dropping 1 million barrels, to 371.6 million barrels. Analysts had expected a decrease of more than twice that at 2.3 million barrels. Gasoline supplies rose by 1 percent, gaining 2.2 million barrels, to 219.3 million barrels. Forecasts called for a similar growth of 2 million barrels. Distillate fuel supplies fell by 1.1 million barrels to 117 million, with analysts actually expecting an increase of 1.5 million barrels. (17) The EIA reported Thursday that natural gas supplies for the week ended Dec. 14 fell by 82 billion cubic feet to 3.724 trillion cubic feet. Analysts forecasted a smaller "decline of 74 billion to 78 billion cubic feet." (18) Due to the stronger than expected decline, U.S. natural gas futures rose 3.1 percent to $3.423 per million British thermal units. (19) Grains & Field Crops The March delivery for corn reached its lowest point since July 6th, falling 17 cents a bushel to finish at $7.03. The drop is being attributed to a rise in ethanol supplies, with corn being the key ingredient in ethanol manufacturing. (20) Wheat forecasts from Argentina, South America's largest producer of wheat, were cut to 10.5 million metric tons and exports are being halted. "Excess rain, heat and fungal diseases" are diminishing current crops to the point of concern over domestic supply. Consequently, this has also brought about a 1.9 percent drop in the March delivery of wheat to $7.905 a bushel. (21) Soybean futures for March delivery fell 1.8 percent to a one-month low of $14.0475 a bushel. This downturn was generated due to another cancelation of purchases by China of "540,000 metric tons, bringing the total to 840,000 tons since Dec. 18." (22) Precious Metals After reaching its lowest point since August of $1,661.01, Gold was able to recover marginally Wednesday "as the U.S. dollar weakened against the euro" by adding $5.85 an ounce to $1,675.39. (23) However, as confidence declined that an agreement would be reach during fiscal cliff talks "gold edged back towards $1,670 an ounce." (24) In an attempt to create jobs, South Africa's African National Congress is trying to reduce the amount of platinum that is exported. This in turn will drive the price of platinum up exponentially as demand will far surpass supply. Proposals from the Trade and Industry Ministry are supposed to increase mineral processing jobs throughout South Africa but are predicted to be yet another hardship on the mining companies that are already threatened with huge taxes on their profits. (25) Other Commodities Due to dryer than usual weather conditions in Florida, the U.S. Department of Agriculture reduced its forecast for Florida's output of orange juice by 5.2 percent. This decrease in output caused orange juice futures for March delivery to reach a 7-month high, increasing 1.1 percent to $1.40 a pound. (26) Cocoa prices fell this week to its "lowest settlement since Nov. 8." Cocoa's March delivery dropped 1.6 percent to $2,358 a ton. (27) This 6-month low is being accredited to favorable weather in West Africa as well as crops already being sold by top growers Ivory Coast and Ghana. (28) Cattle futures for February delivery fell by 0.6 percent to $1.335 a pound, as a result of a projected rise in beef prices that will likely cause a decline in demand. (29) Upcoming:
3. http://www.forbes.com/sites/marketnewsvideo/2012/12/20/initial-claims-increase-gdp-higher/ 5. http://www.huffingtonpost.com/2012/12/20/fiscal-cliff-house-boehner-plan-b_n_2341539.html 6. http://www.nytimes.com/2012/12/20/business/economy/housing-starts-slip.html?_r=0 7. http://www.cnbc.com/id/100328055 8.http://www.cbsnews.com/8301-505123_162-57560203/final-read-on-3q-gdp-economy-grew-at-3.1-percent/ 9. http://money.cnn.com/2012/12/21/news/economy/income-spending-saving/ 10. http://www.reuters.com/article/2012/12/20/us-kbhome-results-idUSBRE8BJ0FN20121220 12. http://www.cnbc.com/id/50031310 13. http://www.cnbc.com/id/100333985 17. http://www.miamiherald.com/2012/12/19/3148895/us-crude-oil-supplies-drop-by.html#storylink=misearch 18. http://www.huffingtonpost.com/huff-wires/20121220/us-natural-gas-storage/?utm_hp_ref=homepage&ir=homepage 19.http://www.bloomberg.com/news/2012-12-20/silver-leads-decline-as-natural-gas-gains-commodities-at-close.html 20. http://www.washingtonpost.com/business/corn-drops-after-government-reports-build-in-fuel-ethanol-inventories-other-commodities-mixed/2012/12/19/95756e32-4a1c-11e2-8af9-9b50cb4605a7_print.html 21. http://www.businessweek.com/news/2012-12-20/argentina-wheat-forecast-cut-exports-halted-on-damaging-weather 22. http://www.bloomberg.com/news/2012-12-20/soybeans-fall-as-china-cancels-purchases-commodities-at-close.html 23. http://www.reuters.com/article/2012/12/19/markets-precious-idUSL4N09T06520121219 24. http://www.reuters.com/article/2012/12/20/markets-precious-idUSL4N09U2YO20121220 25. http://www.reuters.com/article/2012/12/19/safrica-anc-idUSL5E8NJ4WZ20121219 26. http://www.businessweek.com/news/2012-12-18/orange-juice-jumps-to-seven-month-high-on-dry-florida-weather 27. http://online.wsj.com/article/BT-CO-20121219-711224.html 28. http://www.bloomberg.com/news/2012-12-20/cocoa-nears-six-month-low-on-west-african-supplies-sugar-falls.html 29. http://www.bloomberg.com/news/2012-12-20/cattle-fall-from-record-as-high-price-may-curb-demand-hogs-fall.html _______________________________________________________________________________________ Disclaimer: Trading and investing involve a substantial degree of a risk of loss and are not suitable for everyone. Past performance is not indicative of future results. Fundamental factors, seasonal and weather trends, daily news, and other current events may have already been factored into the markets. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. The publisher, and/or its affiliates, staff or anyone associated with FinNews, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Information provided is compiled by sources believed to be reliable. The publisher, and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of the publisher. |
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