Financials: Mar. Bonds are currently 4 higher at 149'27 and the 10 Yr. Notes 3 higher at 133'18. I am still looking at the Bonds as a trading affair between 148'26 and 151'00 with a bias to the short side of the market on rallies. The "fiscal cliff" will dominate price movement as the market awaits a deal on tax cuts before the years' end. At present there is no deal but I suspect that in one form or another the Bush tax cuts will be extended for income below the $250,000 level and a modest increase for the amount above the $250,000 level. By this I mean that the increase will only effect the income above $250,000 not the entire amount. For example if someone makes $300,000 the tax increase will be similar to a surcharge on the $50,000 amount above $250K.
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Grains: Mar. Corn is currently 1'4 lower at 753'2, Jan. Beans 3'0 lower at 1450'6 and Mar. Wheat 0'2 higher at 861'0. We are currently on the sidelines in beans. If you remain long Corn continue to use a protective sell stop in the 748'4 area. We remain long the Mar. Corn 800'0/850'0 call spread of which we currently have about a 1'4 cent loss.
Cattle: Feb. LC are currently 20 lower at 130.57 and Mar. FC about unchanged at 148.20. Producers of live cattle should be looking for hedging opportunites on Feb., Apr. and Jun. contracts. Producers of Feeder Cattle who use short hedges should consider using option strategies for price insurance at this time as opposed to futures as there may be upside potential in Feeder prices if Corn prices remain stable and the dollar weakens.
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Silver: Mar. Silver is currently 75 cents lower at 33.00 and Feb. Gold 25.00 lower at 1695.00. We remain long Silver as a long term trade. I will be interested in adding to the position on a break below the 32.75 level with a 1.00 dollar risk on the additional contract(s). I will also be willing to try the long side of Feb. Gold in the 1687.00 area with about a 20.00 risk.
S&P's: Dec. S&P's are currently 1.00 lower at 1406.00. This market is gyrating on every minor piece of news as it relates to the "fiscal cliff". Personally I feel there is an underlying weakness in the market above the 1410.00 level as participants are looking to take profits by years end to avoid a possible tax increase and to take advantage of the nearly 80% increase over the last 4 years. That being said, technically the market has trended upwards with support in the 1385.00 area and resistance just above the 1420.00 level. Next week I will be quoting the Mar. contract.
Currencies: As of this writing the Dec. Euro is currently 30 higher at 1.3090, the Swiss 13 lower at 1.0792, the Yen 52 higher at 1.2215 and the Pound 17 higher at 1.6110. The Yen is now above the 1.2185 level where we had lowered our protective buy stops taking us out of any remaining short positions. I will be looking to the short side of the market in the Euro above the 1.3150 level. Next week I will be quoting the Mar. contract.
Regards, Marc
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mnemenoff@pricegroup.com
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