Grading The Economic Recovery
Now just might be the time to forget about what you remember about letter grades from your school days. A new dynamic replaces A, B, C, and D with V, U, W, and L. The question seems to be not if we will have a recovery, but when. The markets have shown some good signs of recovery and some would say that we have even surpassed the euphemistic “green shoots recovery” and have a real recovery.
Optimists will point to the recent return to Global growth. Germany and France are now officially out of recession, after positive Gross Domestic Product reports were recently released for both countries. This was welcome news, especially after the prolonged period of negative growth in much of Europe. Remember the classic definition of a recession is two consecutive quarters of negative GDP growth.
By Tim Noland
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Dollar Drops and Oil Pops
Dollar drops and oil pops. Once again a break in oil prices gets reversed on a weakening dollar. Going into the trading day some went into it with a risk adverse posture. The dollar had firmed up in recent days as fears that the day’s economic reports might thwart a seven day stock-market rally and fears that the Federal Deposit Insurance Corporation and our nation’s largest banks might be in worse shape than we thought. Banking health is, believe it or not, a key factor in the price of oil. I have written that from the beginning of this credit crisis that oil has become a hedge against risk; a theme that many doubted at the time but now is widely accepted. Oil became a safe haven as traders lost confidence in the US banking system ran to oil to protect themselves from the deteriorating economic world around us. Now some critics now call that excessive speculation but what I call it is reflection of the reality. You have to remember the value of any commodity when expressed in a currency will ultimately be determined by the confidence and faith in that underlying instrument.
By Phil Flynn
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Let's Take A Walk Through The Soybean Patch
It’s fairly easy to be bearish soybeans given the outlook for a record high yield and a record large soybean crop in the U.S. The crop was planted behind schedule east of the Mississippi, but the overall weather pattern in the Midwest has been favorable for the developing crop. August weather conditions during the critical pod setting stage have been excellent leading to widespread expectations for record high yields. Other bearish factors include large acreage that is expected to be devoted to soybean production in South America and continued concerns regarding Global economic conditions.
Looking ahead, as futures markets are designed to do, I can visualize far more bullish fundamental factors facing the soybean market than bearish factors. Listed below are twelve factors which I consider bullish toward soybean prices over the next few months. Following the list is a brief discussion of each factor.
By Dennis Smith
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