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FinNews for December 7, 2012 Top Stories As fiscal cliff negotiations continue, the optimism that a deal would be made by the Jan. 1 deadline has dwindled, in spite of another proposal being put on the table. (1) With no clear conclusion to the debate in sight and the possibility of increased taxes on dividends, many investors are holding fast causing a lag in trading volume. The New York Stock Exchange reported 5.86 billion traded shares, which is a decline of the year's daily average of 6.48 billion shares.(2) In its most recent Employment Situation Summary, the Bureau of Labor Statistics announced that the unemployment rate decreased slightly to 7.7 percent for the month of November, bringing the number of unemployed to 12 million. Employment increases were made in the retail, health care, as well as professional and business services sectors. There was little change in the number of long-term unemployed, individuals that have gone 27 weeks or more without employment, with November showing a 4.8 million figure. The "total nonfarm payroll employment increased by 146,000 in November. Since the beginning of this year, employment growth has averaged 151,000 per month, about the same as the average monthly job gain of 153,000 in 2011." (3) Economic Releases & Statistics The Institute for Supply Management's (ISM) manufacturing index decreased from 51.7 in Oct. to 49.5 bringing it in under Bloomberg's survey median forecast of 51.4. With 50 marking dividing line, in regard to expansion and contraction, the ISM has returned to a contraction standing, which has not occurred since July of 2009. (4) The ISM's services index was up last month, rising to 54.7 from 54.2 the month prior. (5) The Commerce Department reported that there was a 1.4 percent spending increase in construction from September to October. In the year-to-year builder spending increased by 9.6 percent. Furthermore, the total "seasonally adjusted rate of $872.1 billion in October, [is] up from a revised $860.4 billion in September." (6) Auto sales hit a fresh high last month, jumping to the highest November totals since 2007 and giving executives optimism for the coming year. (7) Stocks & Earnings Apple Inc dropped sharply this week in a sell off fueled by "competition in the mobile device market." The iconic company is now nearly 24 percent lower than its record high hit in September. (8) AT&T Inc is looking to boost spending to $22 billion a year to upgrade networks over the next three years. (9) Global Currencies The Australian dollar slipped following a 25 basis point cut in the interest rate by the Reserve Bank of Australia. The new 3.0 percent rate is the same as the recorded low. (10) The euro reflected weakness this week following a gloomy forecast from the European Central Bank. Bank officials lowered the growth forecast for 2013 and left interest rates unchanged at the current record low of 0.75 percent. (11) In Germany, a glimmer of hope was seen in the German industrial orders which "rebounded strongly" in October, gaining 3.9 percent from the month prior. (12) Oil & Energies Crude oil supplies were 2.4 million barrels lower in the week ending November 30, according to Wednesday's Energy Information Administration (EIA) report. This drip was larger than the 1.25 million barrels forecast by analysts. Gasoline supplies were up 7.9 million barrels, much larger than the forecast for a 2 million barrel build. Distillates were up 3 million barrels versus forecasts for a 800,000 barrel increase. (13) The EIA reported that natural gas supplies were down by 73 billion cubic feet in the week ending November 30. Analysts were expecting a 64 to 68 billion cubic foot draw. (14) The EIA's early release for the 2013 energy outlook projected natural gas growth in which production may exceed consumption by 2020. The report suggests that the US will be " a net exporter of natural gas by the year 2020—two years earlier and with greater volumes of U.S. natural gas exports than was projected in the Annual Energy Outlook 2012." (15) Grains & Field Crops Grain futures in the US edged higher this week with soybean prices reaching a new high for the fourth straight week. "The January contract rose by as much as 0.8% earlier to hit a daily high of USD14.9138 a bushel, the strongest level since November 9." Poor weather conditions in Argentina, in the form of excess rain, are causing "the world's third largest soy grower," to put off the planting of their crops. Further adding to the problem are the predicted storms to hit Brazil later in the week. (16) Although, "this week started with November Russian wheat at $360 a tonne fob, above French at $357 and U.S. Gulf soft red winter at $344 a tonne." Forecasts of global wheat exports for both western European and U.S. are predicted to increase due to Russia's recent drought concerns. (17) The U.S. was already expected to "dominate the corn market through March;" however, with the extensive rain in Argentina and drought conditions plaguing Russia the U.S. may have to be relied upon until May or possibly June for corn supplies. (18) Precious Metals Rand Refinery, the biggest gold refiner in the world, is looking to set up a plant in China within the next few years. This would be the first such move into the Asia, and into one of the world's top gold consuming nations. (19) A new report from the Silver Institute suggests that industrial demand for silver is set to drop 6 percent this year, but recovery may be in store for 2013. (20) Other Commodities Vietnam coffee farmers have exceeded last year's harvest with "about 19 percent of the crop [being reaped], or 280,000 metric tons, the median of eight trader and shipper estimates." This boost was brought about by an earlier harvesting start of two weeks and favorable weather conditions in the form of a dry spell, which is advantageous for not only the harvesting of beans but their ripening as well. (21) Brazil is also seeing record high coffee harvests thanks to favorable weather conditions. "The harvest reached 55.9 million 60-kilogram (132-pound) bags in 2012, [which is] an all-time high for a peak year." (22) Hog prices hit a three-week low, which is being attributed to "speculation[s] that demand is easing after U.S. grocers filled Christmas meat orders." (23) Upcoming:
1. http://www.cbsnews.com/8301-250_162-57557400/when-will-lawmakers-get-serious-on-the-fiscal-cliff/ 2. http://www.reuters.com/article/2012/12/04/us-markets-stocks-idUSBRE8AP08020121204 3. http://www.bls.gov/news.release/empsit.nr0.htm 7. http://www.reuters.com/article/2012/12/03/us-usa-autosales-idUSBRE8B20HF20121203 8. http://www.reuters.com/article/2012/12/05/us-apple-shares-idUSBRE8B40VK20121205 9. http://www.reuters.com/article/2012/11/07/us-att-network-idUSBRE8A61JA20121107 10. http://www.reuters.com/article/2012/12/04/markets-global-idUSL4N09D23M20121204 12. http://www.usnews.com/news/business/articles/2012/12/06/german-industrial-orders-recover-in-october 14. http://www.miamiherald.com/2012/12/06/3129794/us-natural-gas-supplies-shrank.html 17. http://www.reuters.com/article/2012/11/28/wheat-exports-market-idUSL5E8MRAAV20121128 18.http://www.reuters.com/article/2012/11/26/us-argentina-corn-idUSBRE8AP0T120121126 19. http://www.mineweb.com/mineweb/content/en/mineweb-gold-news?oid=165784&sn=Detail 20. http://www.mineweb.com/mineweb/content/en/mineweb-silver-news?oid=163096&sn=Detail 21. http://www.bloomberg.com/news/2012-11-08/vietnam-coffee-harvest-running-ahead-of-last-year-on-dry-weather.html 22. http://www.bloomberg.com/news/2012-12-04/record-brazil-coffee-crop-cuts-costs-for-starbucks-commodities.html 23.http://www.bloomberg.com/news/2012-12-06/crude-oil-drops-as-ecb-cuts-growth-outlook-commodities-at-close.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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