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FinNews for December 28, 2012 Top Stories The fiscal cliff stayed in the news this week. With next week's deadline fast approaching much of the early optimism has faltered. If a deal cannot be met, Congress will have to begin addressing the issue when the new session starts Jan. 3rd. (1) Many retailers were forced "to offer massive post-Christmas discounts in hopes of shedding excess inventory," as predicted sales for the 2012 holiday season are forecast to show the worst decline since the financial crisis of 2008. (2) Timothy Geithner, the US Treasury Secretary, notified Congress Wednesday that the US will hit the debt ceiling on Dec. 31st, at which point the Treasury Department will have to "begin taking certain extraordinary measures authorized by law to temporarily postpone the date that the United States would otherwise default on its legal obligations." (3) Economic Releases & Statistics Although economists' forecasts for November's durable goods orders called for little change – with an increase of only 0.1 percent – the Commerce Department reported a 0.7 percent increase for November. October's reading was also revised to show an advance of 1.1 percent, up from the 0.5 percent initially projected, "suggesting a surprisingly strong and broad increase in corporate spending." (4) New homes sales for November were up 4.4 percent to a seasonally adjusted annual rate of 377,000, the most since April 2010. (5) Analysts' forecasts were only slightly higher at 378,000. (6) Pending Home Sales for November were also up, showing an increase of 1.7 percent to 106.4. This is much higher that than economists' predictions of a 1.0 gain. (7) The U.S. Consumer Confidence Index fell from last month's four-year high of 73.1 to 65.1 as confidence in a deal being struck to avoid the looming fiscal cliff dwindled. (8) Stocks & Earnings Apple stock dropped Thursday by 1.3 percent to $506.55, a 28 percent decline from September's record. This is quite the downturn from early predictions that Apple could top $1,000. (9) A last minute rally in the Standard & Poor 500 index and the Dow Jones was caused by the House of Representatives' planned session to avoid the fiscal cliff. Over the week the ended Dec. 28, the S&P 500 maintained a 0.8 percent loss, which pales in comparison to the year-long 13 percent increase. (10) Greenlight Capital Inc., a New York-based hedge fund, has reportedly lost nearly 20 percent of its value due to a heavy investment in Marvell Technology Group Ltd. Marvell has lost 14.1 percent of its market value after a $1.17 billion copyright infringement lawsuit with Carnegie Mellon was settled. (11) Global Currencies The euro was up by 0.1 percent, trading at $1.3241, as Senate Majority Leader Harry Reid announced Thursday that a deal regarding the fiscal cliff was unlikely to be made. (12) Reid's statements similarly affected the Canadian dollar, driving it to its lowest point of C$0.9959 since November. (13) The yen also hit its lowest point, since 2010, against the US dollar. The dollar rose to 86.15 yen as "expectations a new government in Tokyo will push for aggressive monetary stimulus to boost a sluggish economy and take steps to weaken the Japanese currency." (14) Oil & Energies The fiscal cliff has equally had an effect on oil, with the February delivery of crude oil dropping to $90.87 a barrel. (15) Thursday's expiration of January's natural gas contract fell 3.8 cents, coming in at $3.354 a million British thermal units, due to weather forecasts reporting above-average temperatures. (16) The reported a decline of natural gas storage by EIA was slightly better than analysts' predictions of -76B, coming in at a seasonally adjusted annual rate of -72B. (17) Crude oil supplies were 600,000 barrels lower in the week ending Dec. 21. This was a smaller decline than the 2 million barrel draw forecast by analysts. Gasoline inventories were up 3.8 million barrels versus a forecast for a 250,000 barrel rise. Distillates added 2.4 million barrels versus forecasts for a drop of 350,000 barrels. (18) Grains & Field Crops Argentina continued to see bad weather this week as more rainstorms put off the planting of soy and corn. With Argentina being the world's largest soy oil and soy meal supplier, as well as the second largest corn exporter, the benchmark Chicago soy futures rose by 20 percent. (19) Spain increased its import of wheat by 4.9 percent to 439,298 metric tons, versus 418,889 tons imported a year ago. Corn imports also rose from 399,343 tons to 416,149 tons, resulting in a 4.2 percent increase. The country's grain imports for 2012/2013 season are expected grow by 20 percent after dry weather reduced local cereal harvest. (20) Due to heavy snowstorms across the Plains and the Midwest, wheat for March delivery fell to its lowest point since July. The Chicago Board of Trade showed the "declined [to be] as much as 1 percent to $7.67 a bushel." (21) Precious Metals Although gold dropped Thursday by 50 cents an ounce to $1,662.79, due to the uncertainties surrounded fiscal cliff negotiations, it is still on track to achieve its largest weekly gain in a month. (22) Palladium continued to drop, trading at $693 an ounce. A fragmented marketing campaign, as well as an invariable preference for gold and platinum, has many jewelry manufacturers turning away from the metal. (23) Other Commodities The USDA reported a 6 percent decrease from last year in both the number of placements in feedlots as well as inventories. November placements in feedlots came to 1.92 million, while "cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.3 million head." The decline is being accredited to a drop in supplies and a continual increase in beef prices. (24) The USDA's National Agricultural Statistics Service report on cold storage showed a 13 percent, or 558.035 million pound, increase on pork in cold storage from last year and an 8 percent decrease from last month. "This is below trade estimates of 576.6 and 591 million pounds but is still a record for the month of November." (25) Brazil's coffee harvest beat government estimates of 50.48 million bags with a record high of 50.83 million 60-kg bags. The swell in output is due to additional "irrigation, better fertilizing and trees planted more densely." (26) Cocoa declined by more than 1 percent as the fiscal cliff standoff proceeds. (27) Upcoming:
1. http://www.cnbc.com/id/100343159 2. http://www.reuters.com/article/2012/12/26/us-usa-retail-holiday-idUSBRE8BL03G20121226 3. http://www.cnbc.com/id/100340142 5. http://money.cnn.com/2012/12/27/real_estate/new-home-sales/ 6. http://www.cnbc.com/id/100341371 7. http://www.reuters.com/article/2012/12/28/us-usa-economy-homes-idUSBRE8BR0BE20121228 8. http://money.cnn.com/2012/12/27/news/economy/consumer-confidence/ 9. http://www.bloomberg.com/news/2012-12-27/apple-ceo-s-pay-drops-99-on-lack-of-stock-awards.html 10. http://www.bloomberg.com/news/2012-12-27/u-s-stock-futures-are-little-changed-amid-budget-talks.html 11. http://www.bloomberg.com/news/2012-12-27/einhorn-s-greenlight-may-lose-67-6-million-on-marvell 12. http://www.cnbc.com/id/100340350 13. http://www.reuters.com/article/2012/12/27/markets-canada-dollar-bonds-idUSL1E8NR6O920121227 14. http://www.reuters.com/article/2012/12/27/markets-forex-idUSL1E8NR40320121227 15. http://www.bloomberg.com/news/2012-12-27/oil-fluctuates-near-two-month-high-on-u-s-budget-talks.html 17. http://www.investing.com/news/economic-indicators/u.s.-natural-gas-storage-falls-less-than-expected-242456 18. http://www.google.com/hostednews/ap/article/ALeqM5jbZnLK7FAOw29wlMrVsAYJvl5LuA?docId=36c40c3d3ece45d69600bbb3a162fb9b 19. http://www.reuters.com/article/2012/12/26/argentina-grains-weather-idUSL1E8NQ2U720121226 20. http://www.bloomberg.com/news/2012-12-27/spain-october-wheat-imports-climb-4-9-corn-purchases-rise-4-2-.html 21. http://www.bloomberg.com/news/2012-12-27/wheat-drops-to-five-month-low-on-slowing-demand-for-u-s-crops.html 22. http://www.reuters.com/article/2012/12/28/markets-precious-idUSL4N0A205Q20121228 23. http://www.cnbc.com/id/100301444 24. http://blogs.desmoinesregister.com/dmr/index.php/2012/12/21/cattle-on-feed-down-6-percent/viewart 25.http://www.farmandranchguide.com/marketwatch/livestock/closing-livestock-commentary/article_7cd90bb2-4fa9-11e2-92a6-001a4bcf887a.html 26. http://www.agra-net.com/portal2/home.jsp?template=newsarticle&artid=20018013527&pubid=ag049 27. http://www.reuters.com/article/2012/12/27/markets-commodities-idUSL1E8NR6ZH20121227 _______________________________________________________________________________________ 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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