Issue Date: September 18, 2009
Stock Index Futures - Climbing the Wall of Worry
Why do stock index futures continue to advance in spite of so much negative sentiment surrounding the economy and the equity market outlook? In fact, many of the recent comments on the economy have been focusing on the extremely negative side. One economist said the economy is facing a death buy a thousand cuts and another said advances in stock index futures cannot carry on at the current rate because there are barriers to what is reasonable. Many others remain negative on the economy, but are a little more kind when they say that there will be a double dip recession in the economy when the effects of the various government stimulus plans diminish or are withdrawn. However, they don’t want anyone to bullishly misconstrue this tepid, at best, economic outlook by referring to their “W” bottom prediction for the economy as only a lower case “w” recovery. Apparently the lower case “w” bottom that they refer to describes their expectations of the possibility of two minimal recoveries.
By Alan Bush
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Cushing Oklahoma Drop Allows Oil Bulls to Romp
Oil surged as gold bugs purged and the Energy Information Agency reports an in implausible drop in oil supply. Of course supplies don’t matter when the recession is "most likely” over and the dollar is not worth the paper it is printed on. But let’s start with EIA and supplies anyway.
The Energy Information Agency arm of the Department of Energy blindsided the market with what seems to be a ridiculous drawdown or 4.7 million barrels in crude supply. The bulk of the drawdown came in Midwest and Cushing Oklahoma and by judging by the other numbers, the drawdown does not make sense. How does crude fall in those areas when according to other EIA data it should not.
By Phil Flynn
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Volatility Will Reign as U.S. Corn Crop Races to Maturity
The U.S. corn crop has endured a lot this growing season. In the spring, the crop experienced excessive moisture, primarily in the Northern and Eastern Corn Belts. During the summer, the crop was challenged by below normal temperatures generally across the belt. In addition, spotty hail and wind damage was experienced in many locations. The crop is finally approaching one of the last hurdles to a record crop and that is the ability to reach maturity before a freeze has a large detrimental effect on the national yield. If this week is any indication the market action over the next two weeks will be wrought with volatility as we await the results of any cold weather impact on the U.S. Corn crop.
By Scott J. Harms
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