Financials: Dec. Bonds are currently 1’01 lower at 146’14 and the 10 Yr. Note 17 lower at 131’27. News out of Europe and Asia that the pace of slowing economies is not quite as disparate as once thought has bumped the rate on the 30Yr. Bond to just above the 3.0% level. This morning’s Weekly Jobless Claims showed a decline of 23,000 and Durable Goods orders were up 9.9% vs. expectations of 7.8%. The FOMC has left rates unchanged and will continue their strategy of buying $40 billion worth of long maturity treasuries per month for the near future. What is “up in the air” for the moment is Bernanke’s continuing tenure as Fed Chair, especially if Romney should pervail in the upcoming election. A new Fed chair could could signal an end to continued near zero rates for short term instruments. I maintain my negative bias and will continue to be a seller on sharp rallies.
Grains: Dec. Corn is currently 3’4 lower at 751’0, Nov. Beans 6’2 lower at 1564’2 and Dec. Wheat 3’6 lower at 800’2. We have purchased the Dec. Corn 800’0 calls between 6’0-6’4 as a low risk strategy for being long Corn for the next few weeks. For the longer term I am looking at the March Corn 800’0/850’0 call spread for under 12’0 cents. As for futures, I am still interested in the long side of the market for Dec. Corn between the 725’0-735’0 levels if the market allows.
Cattle: Dec. Cattle is currently 15 higher at 127.22 and Nov. Feeder Cattle 25 higher at 147.425. I am still neutral to slightly negative for nearby contracts and remain on the sidelines. Fundamentally from the supply side I feel that deferred contracts will remain at historically high prices above the 130.00 level for Feb. and Apr. contracts but at current levels I’m not interested in entering the market from either the long or short side. On the demand side I am concerned about competition from cheaper meats especially pork despite tight beef supplies. Of note: I am interested in the short side of Dec. Hogs in the 80.00 area.
Silver: Dec. Silver is currently 47 cents higher at 32.10 and Dec. Gold 13.00 dollars higher at 1714.50. If you went long Silver on Tues. recommendation either take the short term profit or raise your protective sell stop to the 31.80 area. If you went long Dec. Gold over the last couple of sessions, my recommended 10.00 protective sell stop was penetrated. If you were not stopped out raise your stop to the 1706.00 area. We remain long our original long Silver position from the 27.00 area purchased a few months ago.
S&P's: Dec. S&P’s are currently 9.00 higher at 1414.25. Over the last few sessions the market has come close to testing the 1400.00 level with yesterday’s low of 1401.75 and Tues. low of 1402.00. As mentioned on Tues. I have covered all short biased positions and am just looking for short term trades favoring the long side of the market on breaks using close protective sell stops. If you have a strong opinion based on the possible election outcome consider purchasing cheap Nov. puts or calls as opposed to taking a futures position because of the limited risk.
Currencies: As of this writing the Dec. Euro is 10 higher at 1.2990, the Swiss 8 higher at 1.0740, the Yen 70 lower at 1.2465 and the Pound 90 higher at 1.6125. We have covered all short positions in the Euro. I am once again being patient waiting for the market to come to “my price” where I will be a seller in the Euro in the 1.3150 area and a buyer in the 1.2650 area.
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