GENERAL
EQUITIES – The stocks are rebounding today. This is to be expected after weakness. Again the markets are in a Bear in my opinion. This will continue to be the case as outside influences dominate. The cost of capital is climbing slowly but surely. The cost of goods CPI is going to hurt the consumer. This will have a profound impact on the overall market. The point, look at rallies in the stock market as a correction. CRUDE – The crude is up today around $117 dpb. This market will continue to be supported as I have said. There are outside predictions from JP Morgan, and Goldman, that Glod could trade to 150 per barrel. If true or realized look for a real recession. The market can’t take that level. METALS – The metals are rebounding today. As mentioned the silver is at a level where support could be found. There are no buy signals rolling yet. The recent weakness can be for various reasons. The recent uptick in interest rates is one reason. One general comment. Mortgage rates are now above 5%. The housing is slowing considerably. The point of this is how fragile our economy is and it is all built on credit. Given the structure of the market, and current costs, the slowdown in my opinion could be more dramatic than people realize.
SOY
The beans had a large up day. The weather has most participants thinking that there will be no acreage shifts from corn to beans. It is my belief there will still be some for two reasons. The northern planting progress is behind schedule. The second thought is beans relative to corn in old crop is near historic highs one to one. Beans are $10 per bushel higher. In the large corn growing states there won’t be switches. However, in the fringe states I believe there will be a migration to beans, and in the south more cotton.
MEAL / OIL
The bean oil is rebounding again in a considerable fashion. The palm oil has rallied recently due to depressed Malaysian production. The Indonesian situation is still not clarified with respect to exports. The oil share again is approaching 50%. This is significant. The strength in crude is also a positive for vegoils. The point. The bean oil has reasons to be supported. The meal demand globally has been solid. The market however has taken a second position to bean oil. The bean market one vs one in meal is at an all time high. I bring this up as a thought to keep the prices in perspective.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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