What a Difference a Day Makes

Published on: 14:59PM Jan 05, 2011

Yesterday I wrote that the grains, crude and gold were all being very bearish, though it would be a bit early to consider a bear market a done deal. Now look at today's charts!

A big, big rebound in wheat and lots of strength in corn & beans. Crude gained half yesterday's losses, but gold didn't manage any sort of rally. Perhaps the gold market was focused on bonds, a market that was down sharply.

The big economic news of the day was a record-breaking 297,000 jobs created in November, according to ADP. While that is great news, we will need to see another 50 months, yep, four years and two months, to put to work the 15 million folks now looking for work. Still, I have serious reservations about further quantitative easing on the part of the Fed. Maybe I shouldn't have: inflation, if wages move with it, will make everyone's mortgage payments cheaper. That would mean fewer foreclosures. It would be an interesting situation for lenders: they get paid back with cheaper dollars, but they get paid back more of their dollars.

The problem is that wages haven't kept up with inflation, or even come close. And, in 2009, the wheat farmers were looking at 1973 (more or  less) prices for their wheat -- not such a good deal for the farmer. Farmers should vote to keep grain prices up and crude prices down. When I find candidates who will do that, I'll let you know. But don't hold your breath.