The unfolding week's economic calendar is heavily loaded, with a few key economic reports slated for release during the week. The Commerce Department's retail sales report for December, the Fed's Beige Book, the Labor Department's consumer and producer prices reports, the results of the manufacturing surveys of the New York Federal Reserve and the Philadelphia Federal Reserve, the December industrial production report and the University of Michigan's January preliminary consumer sentiment report are among the key economic reports that could help drive trading.
Today, the market, especially the materials, commodities have come under pressure from Deutsche Bank lowering estimates on AA, and the USDA crop prodiction estimates. Deutsche Bank said Alcoa's net debt position of about $9 billion and near-term negative free cash flow makes a rebound unlikely in the near future.
Mid way through the day, financials came under tremendous pressure lead by C. Citigroup also suffered a notable loss amid reports that the financial services giant is weighing a sale of a stake in its Smith Barney brokerage business to Morgan Stanley (MS). Though Citi would boost its equity base by about 5Bn through this sale, this actio is percieved as bad by the analysts, as Smith Barney is one of the cash generating business (worth 10Bn) for C. Also, C analysts cut down the estimates for BofA and expected a 3.6Bn operating loss estimate for BofA this quarter, where as C itself is expected to report $10 Bn operating loss for the upcoming quarter. But, C and BofA, i guess, are cutting down their diversified operations and trying to concentrate on their core business, ie. retail and Commercial banking. C market cap less than US Bancorp.. No way.. I would buy in C at the current level as a long term investment.
Commodities were lower across th board today as the USDA crop data is out, and the report screams a falling demand and increasing stocks (inventory) of all commodities globally.
Corn was increased from 1.474 to 1.790 million bushels.
Soybeans was increased from 205 to 225 million bushels.
Wheat was increased from 623 to 655 million bushels.
As of December 1st, the USDA said that there were:
10.1 billion bushels of corn stocks, up 2% from a year ago.
2.28 billion bushels of soybean stocks, down 4% from a year ago.
1.42 billion bushels of wheat stocks, up 26% from a year ago.
Most of the fertilizer stocks came under a selling pressure, with POT down about 12% ($74), MOS down 11% (34.6), AGU down 10% (31). I do believe that the commodities at these levels are oversold and the prices are consolidating at these levels. I would own the general Ag Stocks ( ETF - MOO) at these levels,, and add as the price falls down.
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